P9-5

Cost of Goods Sold Method

Statement of Comprehensive Income

ACE Trading Co.

Statement of Comprehensive Income
For the year ended December 31, 2015

Gross Sales 3 800 000

Less: Sales returns and allowances (130 050)
Net Sales 3669950
Less: Cost of Goods Sold 2 226 100
Gross Profit 1 443 850
Less: Operating Expense
Store salaries 360 400
Advertising 140 500
Transportation-out 80 700
Office salaries 253 300
Rent expense 305 000
Other office expenses 50 540
Insurance expense 45 000
Telephone expense 4 500
Office supplies expense 115 710
Depreciation expense -f&f 83 050
Bad debts expense 34 500
Interest expense 4 500 (1 477 700)
Operating Loss (33 850)
Add: Interest Income 4 700
Total Net Loss (29 150)

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P9-5
Direct Extension Method
Statement of Comprehensive Income

ACE Trading Co.

Statement of Comprehensive Income
For the year ended December 31, 2015

Gross Sales 3 800 000

Less: Sales returns and allowances (130 050)
Net Sales 3 669 950
Less: Cost of Goods Sold
Beginning Merchandise Inventory 0
Add: Net Purchases
Purchases 2 840 500
Add: Transportation –in 180 600
Less: Purchase discount (230 000) 2 791 100
Total Goods Available For Sale 2 791 100
Less: Ending Merchandise Inventory (565 000) (2 226 100)
Gross Profit 1 443 850
Less: Operating Expense
Store salaries 360 400
Advertising 140 500
Transportation-out 80 700
Office salaries 253 300
Rent expense 305 000
Other office expenses 50 540
Insurance expense 45 000
Telephone expense 4 500
Office supplies expense 115 710
Depreciation expense -f&f 83 050
Bad debts expense 34 500
Interest expense 4 500 (1 477 700)
Operating Loss (33 850)
Add: Interest Income 4 700
Total Net Loss (29 150)

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P9-5
Statement of Changes in Owner’s Equity

ACE Trading Co.

Statement of Changes in Owner’s Equity
For the year ended December 31, 2015

J. King, Capital (beginning) 2 324 350

Less: Net Loss (29 150)
Drawings (380 000)
J. King, Capital (ending) 1 915 200

P9-5
Statement of Financial Position

ACE Trading Co.

Statement of Financial Position
December 31, 2015

Assets
Cash 520,100
Accounts receivable 690,000
Less: Allowance for Bad Debts (34 500) 655 500
Notes receivable 170,500
Prepaid insurance 35,000
Store supplies 100,750
Office supplies 34,500
Interest receivable 2 900
Prepaid rent 55 000
Furniture and Fixtures 830,500
Less: Accumulated depreciation –f&f (83 050) 747 450
Merchandise Inventory, 12/31 565 000
Total 2 886 700

Liabilities and Owner’s Equity

Accounts payable 450 000

Notes payable 500 000
Salaries payable 12 500
Telephone payable 4 500
Interest payable 4 500 971 500

J. King, Capital (ending) 1 915 200

2 886 700