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The following account balances were included in the trial balance of Bridgeport Corporation at...

Question:

The following account balances were included in the trial balance of Bridgeport Corporation at June 30, 2017.

Sales revenue $1,596,300

Depreciation expense (office furniture and equipment) $7,344

Sales discounts 31,740

Property tax expense 7,894

Cost of goods sold 903,200

Bad debt expense (selling) 4,535

Salaries and wages expense (sales) 56,530

Maintenance and repairs expense (administration) 8,321

Sales commissions 98,230

Office expense 5,500

Travel expense (salespersons) 34,200

Sales returns and allowances 59,395

Delivery expense 22,230

Dividends received 39,690

Entertainment expense 15,060

Interest expense 18,440

Telephone and Internet expense (sales) 9,070

Income tax expense 109,350

Depreciation expense (sales equipment) 5,091

Depreciation understatement due to error?2014 (net of tax) 19,103

Maintenance and repairs expense (sales) 5,949

Dividends declared on preferred stock 9,040

Miscellaneous selling expenses 4,719

Dividends declared on common stock 38,070

Office supplies used 3,391

Telephone and Internet expense (administration) 2,730

The Retained Earnings account had a balance of $353,730 at July 1, 2016. There are 86,470 shares of common stock outstanding.

question part (a1)

(a1) Using the multiple-step form, prepare an income statement for the year ended June 30, 2017

Income Statement

The income statement is a financial statement where revenue, costs, and expenses are presented for a specific period. There are two types of income statement presentation:

  • Single-step income statement - it is the simplest form and it has only one computation to compute for the net profit or net loss.
  • Multi-step income statement - it is a type of income statement presentation that has a multi-process of computing income and expenses to arrive at a net profit or net loss.

Answer and Explanation:

Bridgeport Corporation
Income Statement
For the period ended June 30, 2017
Sales 1,596,300
Sales Discount (31,740)
Sales Returns and Allowances (59,395)
Net Sales 1,505,165
Cost of Goods Sold (903,200)
Gross Profit 601,965
Operating Expenses
Selling Expenses
Sales Commission 98,230
Salaries and Wages Expense (Sales) 56,350
Travel Expense (Salespersons) 34,200
Delivery Expense 22,230
Telephone and Internet Expense (Sales) 9,070
Maintenance and Repairs Expense (Sales) 5,949
Depreciation Expesne (Sales Equipment) 5,091
Miscellaneous Selling Expense 4,719
Bad Debts Expense (Selling) 4,535
Total Selling Expenses 240,374
General and Administrative Expenses
Entertainment Expense 15,060
Maintenance and Repairs Expense (Administration) 8,321
Property Tax Expense 7,894
Depreciation expense (Office Furniture and Equipment 7,344
Office Expense Used 3,391
Telephone and Internet Expense (Administration) 2,730
Total General and Administrative Expenses 44,740
Total Operating Expenses (285,114)
Other Operating Revenues and Expenses
Dividend Income 39,690
Interest Expense (18,440)
Total Other Revenue and Expenses 21,250
Income Before Income Taxes 338,101
Income Tax Expense 109,350
Net Income 228,751

Dividends distributed to common and preferred stocks are not included in the income statement. Depreciation understated should be part of the retained earnings as part of the prior period adjustments.


Learn more about this topic:

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Operations of an Income Statement

from Accounting 101: Financial Accounting

Chapter 8 / Lesson 5
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