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The accountant of Riverbed Shoe Co, has compiled the following information from the company's...

Question:

The accountant of Riverbed Shoe Co, has compiled the following information from the company's records as a basis for the year ended December 31, 2017.

Rent revenue $30,400
Interest expense 19,400
Market appreciation on land above cost 32,400
Salaries and wages expense (selling) 116,200
Supplies expense (selling) 19,000
Income tax 38,800
Salaries and wages expense (administrative) 137,300
Other administrative expenses 53,100
Cost of goods sold 497,400
Net sales 591,400
Depreciation on plant assets (70% selling, 30% administrative) 66,400
Cash dividends declared 17,400

There were 21,870 shares of common stock outstanding during the year.

a. Prepare a multiple-step income statement.

b. Prepare a single-step income statement.

Net Income

Net Income is the revenue earned by a business for a certain accounting period after deducting all the expenses that it incurred and its income tax expense as well.

Answer and Explanation:

a. Multiple-step income statement.

Net Sales $591,400
Cost of Goods Sold (497,400)
Gross Profit 94,000
add: Operating Income
Rent Revenue 30,400
Total Operating Income 30,400
less: Operating Expenses
Salaries and Wages Expense (selling) (116,200)
Salaries and Wages Expense (administrative) (137,300)
Supplies Expense (19,000)
Other Administrative Expenses (53,100)
Total Operating Expenses (325,600)
less: Non-Operating Expenses
Interest Expense (19,400)
Income Tax Expense (38,800)
Total Non-Operating expenses (58,200)
Net Loss ($259,400)


b. Single-step income statement.

Net Sales $591,400
Rent Revenue 30,400
Cost of Goods Sold (497,400)
Salaries and Wages Expense (selling) (116,200)
Salaries and Wages Expense (admin.) (137,300)
Supplies Expense (19,000)
Other Admin. Expenses (53,100)
Interest Expense (19,400)
Income Tax Expense (38,800)
Net Loss ($259,400)

Learn more about this topic:

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What Is Net Income? - Definition & Formula

from OSAT Business Education (CEOE) (040): Practice & Study Guide

Chapter 69 / Lesson 5
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