90.2K

Verified Solution

Link Copied!

PA6-4 Preparing a Multi-step Income Statement with Sales Discounts and Sales Returns and Allowances, and Computing the Gross Profit Percentage (LOS) Big Billy Corporation is a local grocery store organized seven years ago as a corporation. The store is in an excellent location, and soles have increased each year. The bookkeeper prepared the following statement (assume that all amounts are correct, but note the incorrect terminology and format) BIG BILLY CORPORATION Profit and Loss December 31 Debit Credit Sales $414,000 Cost of Goods Sold $276,000 Sales Returns and Allowances 9,400 Sales Discounts 5,400 Selling Expense 56,800 Administrative Expense 15,400 General Expenses 1,000 Income Tax Expense 14,400 Net Income 35,600 Totals $414,000 $414,000 Required: 1. Prepare a multi-step income statement that would be used for internal reporting purposes. Treat Sales Returns and Allowances as well as Sales Discounts as contra-revenue accounts. BIG BILLY CORPORATION Income Statement For the Year Ended 31 Totals $414,000 $414,000 Required: 1. Prepare a multi-step income statement that would be used for internal reporting purposes. Treat Sales Returns and Allowances as well as Sales Discounts as contra-revenue accounts. BIG BILLY CORPORATION Income Statement For the Year Ended December 31 Operating expenses 2. Prepare a multi-step income statement that would be used for external reporting purposes, beginning with the amount for Net Sales. BIG BILLY CORPORATION Income Statement For the Year Ended December 31 3. Compute the gross profit percentage. (Round your answer to 1 decimal place.) Gross profit percentage

Answer & Explanation Solved by verified expert

See Answer