The unadjusted trial balance of World Enterprises for the year ended December 31, 2017, follows:

Additional information:
1. There is $750 of supplies on hand on December 31, 2017.
2. The one-year insurance policy was purchased on March1, 2017.
3. Depreciation expense for the year is $10,000 for the equipment and $4,500 for the furniture.
4. Accrued interest expense at December 31, 2017, is $675.
5. Unearned revenue of $975 is still unearned at December 31, 2017. On the sales that were earned, cost of goods sold was $1,750.
6. A physical count of merchandise inventory indicates $32,750 on hand on December 31, 2017.
Instructions
(a) Prepare the adjusting journal entries assuming they are prepared annually and update account balances.
(b) Prepare a multiple-step income statement.
(c) Prepare a single-step income statement.
(d) Prepare the closing entries.
Taking It Further
Compare a single-step income statement and a multiple-step income statement for a merchandising company. How are they similar and different? Comment on the usefulness of each one.

Transcribed Image Text:

WORLD ENTERPRISES Trial Balance December 31, 2017 Merchandise inventory Accumulated depreciation-equipment Accumulated depreciation-furniture Accounts payable Unearned revenue S. Kim, capital S. Kim, drawings 48,000 265,000 Sales returns and allowances Cost of goods sold $526,400