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Chapter 5Problems: Set BP5-5B?An inexperienced accountant prepared this condensed income statement for Wright Company, a retail firm that has been in business for a number of years.WRIGHT COMPANYIncome StatementFor the Year Ended December 31, 2014RevenuesNet salesÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $952,000Other revenuesÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 16,000ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 968,000Cost of goods soldÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 548,000Gross profitÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 420,000Operating expensesSelling expensesÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 160,000Administrative expensesÿÿÿÿÿÿÿÿÿ 104,000ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 264,000Net earningsÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ$156,000As an experienced, knowledgeable accountant, you review the statement and determine the following facts.Net sales consist of sales $972,000, less freight-out on merchandise sold $20,000.Other revenues consist of sales discounts $12,000 and interest revenue $4,000.Selling expenses consist of salespersons? salaries $88,000; depreciation on equipment $4,000; sales returns and allowances $46,000; advertising $12,000; and sales commissions $10,000. All compensation should be recorded as Salaries and Wages Expense.Administrative expenses consist of office salaries $54,000; dividends $14,000; utilities $13,000; interest expense $3,000; and rent expense $20,000, which includes prepayments totaling $2,000 for the first month of 2015. The utilities represent utilities paid. At December 31, utility expense of $3,000 has been incurred but not paid.InstructionsPrepare a correct detailed multiple-step income statement.*P5-9B?At the beginning of the current season on November 1, the ledger of Winona Sports showed Cash $3,300, Inventory $4,700, and Common Stock $8,000. The following transactions occurred during November 2014.Nov.ÿÿÿ 5ÿÿÿÿ Purchased hockey sticks and pucks on account from Hi-Stick Co. $1,600, terms 2/10, n/60.ÿÿÿÿÿÿÿÿÿÿ 7ÿÿÿÿ Paid freight on Hi-Stick Co. purchases $90.ÿÿÿÿÿÿÿÿÿÿ 9ÿÿÿÿ Received credit from Hi-Stick Co. for merchandise returned $350.ÿÿÿÿÿÿÿÿ 10ÿÿÿÿ Sold merchandise on account for $1,000, terms n/30.ÿÿÿÿÿÿÿÿ 12ÿÿÿÿ Purchased gloves, socks, and other accessories on account from Twin City Sportswear $945, terms 1/10, n/30.ÿÿÿÿÿÿÿÿ 14ÿÿÿÿ Paid Hi-Stick Co. in full.ÿÿÿÿÿÿÿÿ 17ÿÿÿÿ Received credit from Twin City Sportswear for merchandise returned $45.ÿÿÿÿÿÿÿÿ 20ÿÿÿÿ Made sales on account for $1,330, terms n/30.ÿÿÿÿÿÿÿÿ 21ÿÿÿÿ Paid Twin City Sportswear in full.ÿÿÿÿÿÿÿÿ 27ÿÿÿÿÿ Granted credit to customers for clothing that did not fit properly $150.ÿÿÿÿÿÿÿÿ 30ÿÿÿÿÿ Received payments on account for $1,900.The chart of accounts for Winona Sports includes Cash, Accounts Receivable, Inventory, Accounts Payable, Common Stock, Sales Revenue, Sales Returns and Allowances, Purchases, Purchase Returns and Allowances, Purchase Discounts, and Freight-In.Instructions(a)ÿ Journalize the November transactions using a periodic inventory system.(b)ÿ Using T-accounts, enter the beginning balances in the ledger accounts and post the November transactions.(c)ÿ Prepare a trial balance on November 30, 2014.(d)ÿ Prepare an income statement through Gross profit, assuming inventory on hand at November 30 is $5,196.

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