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 $ 800 2,250 600 1,850 2,000 2,950 120 1,250 720 2,610 5,600 960 510 200

Answer 1

Green Market

Income Statement For the year ended December 31, Year 2 ( single step approach)

Sales Revenue Gain on sale of land Total revenue and gains Expenses Cost of goods sold Advertising expense Interest expense Salaries expense Rent expense Total expenses and losses	2,950 600 120 960 510 5,140	5,600 200 5,800 (5140)
Net income		$660

Green market

Income Statement For the year ended December 31, Year 2 (multi step approach)

Sales Revenue Cost of goods sold Gross profit Operating expenses Advertising expense salaries expense Rent expense Total operating expenses Operating income Non operating items Interest expense Gain on sale of land Total non -operating	600 960 510 2,070 (120) 200 80	5,600 (2,950) 2,650 (2,070) 580 80
Net income		$660