Question

The following information was taken from the accounts of Green Market, a small grocery store, at December 31, Year 1. The accounts are listed in alphabetical order, and all have normal balances.

The following information was taken from the accounts of Green Market, a small grocery store, at December 31, Year 1. The accounts are listed in alphabetical order, and all have normal balances. Accounts payable Accounts receivable Advertising expense Cash Common stock Cost of goods sold Interest expense Merchandise inventory Prepaid rent Retained earnings, 1/1/Year 1 Sales revenue Salaries expense Rent expense Gain on sale of land $ 800 2,250 600 1,850 2,000 2,950 120 1,250 720 2,610 5,600 510 200 Required Prepare an income statement for the year using the single-step and multistep approach. (Amounts to be deducted and losses should be indicated with a minus sign.) Single-step GREEN MARKET Income Statement For the Year Ended December 31, Year 1 Expenses Total cost and expenses

Answer 1

Solution:

Requirement 1: Single Step Income Statement

GREEN MARKET
Income statement
For THE YEAR Ended December 31, Year 1
Sales Revenue(A)		$                 5,600
Expenses
Cost of goods sold	$               2,950
Advertising Expense	$                   600
Interest expense	$                   120
Salaries expense	$                   960
Rent expense	$                   510
Total cost and expenses(B)		$                 5,140
Gain on sale of land©		$                     200
Net Income (A-B+C)		$                     660

Requirement 2: Multi-Step Income Statement

GREEN MARKET
Income statement
For THE YEAR Ended December 31, Year 1
Sales Revenue		$                 5,600
Less: Cost of goods sold		$               (2,950)
Total Revenue (A)		$                 2,650
Operating Expenses:
Advertising Expense	$                   600
Salaries expense	$                   960
Rent expense	$                   510
Total Operating Expenses(B)		$                 2,070
Operating Income(A-B)		$                     580
Non-operating items:
Interest expense		$                  (120)
Gain on sale of land		$                     200
		$                        -
Net Income		$                     660