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.

Accounts payable	$	800
Accounts receivable		2,250
Advertising expense		600
Cash		1,850
Common stock		2,000
Cost of goods sold		2,950
Interest expense		120
Merchandise inventory		1,250
Prepaid rent		720
Retained earnings, 1/1/Year 1		2,610
Sales revenue		5,600
Salaries expense		960
Rent expense		510
Gain on sale of land		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 Net income

Answer 1

Part 1

GREEN MARKET Income Statement For the Year Ended December 31, Year 1
Net sales revenue		5600
Expenses
Cost of goods sold	2950
Advertising expense	600
Interest expense	120
Salaries expense	960
Rent expense	510
Total cost and expenses		5140
Gain on sale of land		200
Net income		$660

Part 2

GREEN MARKET Income Statement For the Year Ended December 31, Year 1
Net sales revenue		5600
Cost of goods sold		(2950)
Gross margin		2650
Operating expenses
Advertising expense	600
Salaries expense	960
Rent expense	510
Total operating expense		2070
Operating income		580
Non-operating items
Interest expense		(120)
Gain on sale of land		200
Net income		$660