Kế toán, kiểm toán - Chapter 13: Financial statements and closing procedures

What is a single-step income statement? A single-step income statement is a format in which only one computation is needed to determine the net income.

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1-*McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Financial Statements and Closing Procedures Section 1: Preparing the Financial StatementsChapter13Section ObjectivesPrepare a classified income statement from the worksheet.Prepare a statement of owner’s equity from the worksheet.Prepare a classified balance sheet from the worksheet.A classified income statement is sometimes called a multiple-step income statement. The Classified Income StatementObjective 1 Prepare a classified income statement from the worksheetA single-step income statement is a format in which only one computation is needed to determine the net income.ANSWER:QUESTION:What is a single-step income statement?(Total Revenue – Total Expenses = Net Income)Three elements are needed to compute the cost of goods sold:The Cost of Goods Sold section contains information about the cost of the merchandise that was sold during the period.Cost of Goods Sold Beginning inventory Net delivered cost of purchases Ending inventory Purchases Freight In (Purchases Returns and Allowances) (Purchases Discounts) Net Delivered Cost of PurchasesNet Delivered Cost of PurchasesCost of Goods Sold Beginning Merchandise InventoryNet Delivered Cost of PurchasesCost of Goods Available for SaleLess Ending Inventory Cost of Goods SoldCost of Goods Sold Merchandise available for saleCost of goods soldNet income from operations Other Income and Other Expenses Net income for Whiteside AntiquesThe statement of owner's equity reports the changes that occurred in the owner's financial interest during the period. The ending capital balance for Bill Whiteside, $84,576.80, is used to prepare the balance sheet. Objective 2Prepare a Statement of Owner’s Equity from the worksheetCurrent AssetsCurrent assets for Whiteside AntiquesPlant and EquipmentNoncurrent assets are called long-term assets. An important category of long-term assets is plant and equipment. For many businesses plant and equipment represents a sizable investment.Current Liabilities Assets Prepaid Interest75.006,300.00 Total Current Assets 98,716.00 Total Plant and Equipment31,900.00 Total Assets 130,616.00Liabilities and Owner’s Equity Current Liabilities Notes Payable-Trade 2,000.00 Notes Payable-Bank 9,000.00 Accounts Payable 24,129.00 Interest Payable 20.00 Social Security Tax Payable 1,158.40 Medicare Tax Payable 267.40 Employee Income Tax Payable 990.00 Fed. Unemployment Tax Pay. 9.60 State Unemployment Tax Pay. 64.80 Salaries Payable 1,200.00 Sales Tax Payable 7,200.00Total Current Liabilities 46,039.20Whiteside AntiquesPartial Balance Sheet December 31, 2013Total current liabilitiesAlthough repayment of long-term liabilities might not be due for several years, management must make sure that periodic interest is paid promptly. Long-term liabilities include mortgages, notes payable, and loans payable. Long-Term Liabilities Financial Statements and Closing Procedures Section 2: Completing the Accounting CycleChapter13Section ObjectivesJournalize and post the adjusting entries.Journalize and post the closing entries.Prepare a postclosing trial balance.Journalize and post reversing entries. Adjusting EntriesType of Adjustment Worksheet ReferencePurposeInventory(a – b)Removes beginning inventory and adds ending inventory to the accounting records.Expense(c – e)Matches expense to revenue for the period; the credit is to a contra asset account. Accrued Expense(f – i)Matches expense to revenue for the period; the credit is to a liability account.Prepaid Expense(j –l)Matches expense to revenue for the period; the credit is to an asset account. Accrued Interest(m)Recognizes interest earned in the period. The debit is to an asset account, (interest receivable) and the credit is to a revenue account.Close revenue accounts and cost of goods sold accounts with credit balances to Income Summary.Close expense accounts and cost of goods sold accounts with debit balances to Income Summary.Close Income Summary, which now reflects the net income or loss for the period, to owner's capital.Close the drawing account to owner's capital.There are four steps in the closing process: