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PR 6-1A Carpet Land Co.

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PR 6-1A Multiple-step income statement and report form of balance sheet

The following selected accounts and their current balances appear in the ledger of Carpet
Land Co. for the fiscal year ended October 31, 2012:

Cash $ 274,000 Sales Returns and Allowances $ 70,000
Accounts Receivable 425,000 Sales Discounts 55,000
Merchandise Inventory 525,000 Cost of Merchandise Sold 3,600,000
Offi ce Supplies 12,000 Sales Salaries Expense 925,000
Prepaid Insurance 9,000 Advertising Expense 150,000
Offi ce Equipment 315,000 Depreciation Expense—
Accumulated Depreciation— Store Equipment 35,000
Offi ce Equipment 187,000 Miscellaneous Selling Expense 40,000
Store Equipment 900,000 Offi ce Salaries Expense 315,000
Accumulated Depreciation— Rent Expense 115,000
Store Equipment 293,000 Depreciation Expense—
Accounts Payable 193,000 Offi ce Equipment 22,000
Salaries Payable 12,000 Insurance Expense 18,000
Note Payable Offi ce Supplies Expense 9,000
(fi nal payment due 2037) 400,000 Miscellaneous Administrative Exp. 11,000
Maggie Young, Capital 750,000 Interest Expense 15,000
Maggie Young, Drawing 150,000
Sales 6,155,000


1. Prepare a multiple-step income statement.

2. Prepare a statement of owner’s equity.

3. Prepare a report form of balance sheet, assuming that the current portion of the note
payable is $16,000.

4. Briefly explain (a) how multiple-step and single-step income statements differ and (b)
how report-form and account-form balance sheets differ.

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