Two items are omitted in each of the following four lists of income statement data. Determine
the amounts of the missing items, identifying them by letter.Sales $393,000 $500,000 $930,000 $ (g)
Sales returns and allowances (a) 15,000 (e) 30,500
Sales discounts 18,000 8,000 30,000 37,000
Net sales 350,000 (c) 860,000 (h)
Cost of merchandise sold (b) 285,000 (f) 540,000
Gross profit 140,000 (d) 340,000 150,000How many errors can you find in the following income statement?244 Chapter 5 Accounting for Merchandise Operations
Exercise 5-12
Determining amounts for items
omitted from income statement
Goal 2
a. $25,000Exercise 5-13
Multiple-step income
statement
Goal 2Exercise 5-14
Multiple-step income statement
Goal 2
a. Net income, $77,500The Plautus Company
Income Statement
For the Year Ended October 31, 2006Revenue from sales:
Sales $4,200,000
Add: Sales returns and
allowances $81,200
Sales discounts 20,300 101,500
Gross sales $4,301,500
Cost of merchandise sold 2,093,000
Income from operations $2,208,500
Operating expenses:
Selling expenses $ 203,000
Transportation out 7,500
Administrative expenses 122,000
Total operating expenses 332,500
$1,876,000
Other expense:
Interest revenue 66,500
Gross profit $1,809,500On January 31, 2006, the balances of the accounts appearing in the ledger of Calloway
Company, a furniture wholesaler, are as follows:Administrative Expenses $ 80,000 Office Supplies $ 10,600
Building 512,500 Retained Earnings 528,580
Capital Stock 100,000 Salaries Payable 3,220
Cash 48,500 Sales 925,000
Cost of Merchandise Sold 560,000 Sales Discounts 20,000
Dividends 25,000 Sales Returns and Allowances 60,000
Interest Expense 7,500 Selling Expenses 120,000
Merchandise Inventory 130,000 Store Supplies 7,700
Notes Payable 25,000a. Prepare a multiple-step income statement for the year ended January 31, 2006.
b. Compare the major advantages and disadvantages of the multiple-step and single-step
forms of income statements.