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    Problem A - VI — Multiple-Step Income Statement (15 points)

    ATLANTIC DEPARTMENT STORE


    Income Statement
    For Year Ended December 31, 2012
    Sales revenues
    Sales Revenue .................................................................. $330,000
    Less: Sales discounts ........................................................ 13,000
    Net sales .................................................................................... $317,000

    Cost of goods sold ...................................................................... 215,000


    Gross profit ................................................................................. 102,000
    Operating expenses
    Selling expenses ............................................................... 27,000
    Administrative expenses .................................................... 18,000
    Total operating expenses ............................................. 45,000
    Income from operations .............................................................. 57,000
    Other revenues and gains
    Interest revenue ................................................................. 600
    Other expenses and losses
    Interest expense ................................................................ 800 (200)
    Net Income .................................................................................. $ 56800

    Problem A - VII — Correcting Entries (12 points)


    1. May 31 Cash ............................................................................ 10,800
    Service Revenue ........................................................... 1,200
    Unearned Service Revenue ................................. 12,000

    2. May 31 Equipment .................................................................... 7,500


    Supplies ............................................................... 7,500

    3. May 31 No correction needed

    4. May 31 Service Revenue .......................................................... 6,000


    Accounts Receivable ........................................... 6,000

    Note: No explanations either before or after entries.

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