Question

The following Information was taken from the accounts of Green Market, a small grocery store, at December 31, Year 2 The accounts are listed in alphabetical order, and all have normal balances. $ 60 400 200 410 200 600 78 Accounts payable Accounts receivable Advertising expense Cash Common stock Cost of goods sold Interest expense Merchandise inventory Prepaid rent Retained earnings, 1/1/Year 2 Sales revenue Salaries expense Rent expense Gain on sale of land 450 40 635 1,000 130 110 25 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 (loss) Multistep GREEN MARKET Income Statement For the Year Ended December 31, Year 1 Operating expenses Total operating expenses Operating income (loss) Non-operating items Net income (loss)

Answer 1

1. Single step

Green Market
Income Statement
For the year ended December 31, Year 1
	$	$
Net Service Revenue		1,000.00
Less Expenses:
Cost of goods sold	600.00
Advertising expense	200.00
Interest expense	70.00
Salaries expense	130.00
Rent Expense	110.00
Total cost and expenses		(1,110.00)
Gain on sale of land		25.00
Net Loss		$           (85.00)

2. Multistep

Green Market
Income Statement
For the year ended December 31, Year 1
	$	$
Net Service Revenue		1,000.00
Cost of goods sold		(600.00)
Gross margin		400.00
Operating expenses:
Advertising expense	200.00
Salaries expense	130.00
Rent Expense	110.00
Total operating expense		(440.00)
Operating loss		(40.00)
Non-operating items:
Interest expense		(70.00)
Gain on sale of land		25.00
Net Loss		$      (85.00)