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. 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 $ 614 414 200 424 214 700 56 310 54 649 1,140 270 100 89 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

Answer 1

Single Step

GREEN MARKET
Income Statement
For the Year Ended December 31, Year 1
Sales revenue		1,140
Expenses:
Advertising expense	200
Cost of goods sold	700
Interest expense	56
Salaries expense	270
Rent expense	100
Total cost and expenses		-1,326
Gain on sale of land		89
Net Loss		($97)

Multistep

GREEN MARKET
Income Statement
For the Year Ended December 31, Year 1
Sales revenue		1,140
Cost of goods sold		-700
Gross profit		440
Operating expenses:
Advertising expense	200
Salaries expense	270
Rent expense	100
Total Operating expenses		-570
Operating Loss		-130
Non-operating items:
Gain on the sale of investments		89
Interest expense		-56
Net loss		($97)

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