Response to the following problem:
The following selected accounts and their current balances appear in the ledger of Sciatic Co. for the fiscal year ended July 31, 2006:
Cash $123,000 Sales $1,028,000
Accounts Receivable 96,800 Sales Returns and Allowances 18,480
Merchandise Inventory 140,000 Sales Discounts 17,520
Office Supplies 4,480 Cost of Merchandise Sold 620,000
Prepaid Insurance 2,720 Sales Salaries Expense 138,560
Office Equipment 68,000 Advertising Expense 35,040
Accumulated Depreciation- Depreciation Expense-
Office Equipment 10,240 Store Equipment 5,120
Store Equipment 122,400 Miscellaneous Selling Expense 1,280
Accumulated Depreciation- Office Salaries Expense 67,320
Store Equipment 27,360 Rent Expense 25,080
Accounts Payable 44,480 Depreciation Expense-
Salaries Payable 1,920 Office Equipment 10,160
Note Payable
Insurance Expense 3,120 (final payment due 2016) 44,800
Office Supplies Expense 1,040 Capital Stock 75,000
Miscellaneous Administrative
Retained Earnings 301,600 Expense 1,280
Dividends 28,000 Interest Expense 4,000
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a retained earnings statement.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $6,000.
4. Briefly explain how multiple-step and single-step income statements differ.