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    carter522's Avatar
    carter522 Posts: 3, Reputation: 1
    New Member
     
    #1

    Apr 11, 2010, 06:10 PM
    Single step income statement
    Here is the assignement, I am on (1) Prepare a single-step income statement for the year

    I3-2:

    The Grey Sky Company, which has 25,000 shares of common stock outstanding, reports the following ledger balances as of December 31 after adjustments and before closing entries.

    Accounts Receivable 85,000
    Inventory 150,000
    Land 900,000
    Accounts Payable 90,000
    Common Stock 500,000
    Retained Earnings (beginning of year) 238,000
    Sales 1,400,000
    Rent revenue 28,000
    Cost of goods sold 600,000
    Selling expenses 200,000
    Administrative expenses 170,000
    Loss on discontinued operation 50,000
    Extraordinary gain 67,000
    Extraordinary loss 40,000
    Unrealized holding gain on available-for-sale securities 12,000
    Cash dividends paid 100,000
    Income tax expense applicable to:
    Income from continuing operations 131,000
    Loss on discontinued operations 18,000
    Extraordinary gain 23,000
    Extraordinary loss 8,000

    Instructions:

    (1) Prepare a single-step income statement for the year.
    (2) Prepare a retained earnings statement for the year.
    (3) Use the second income statement format to report comprehensive income.


    Here is what I have done:

    GREY SKY COMPANY
    INCOME STATEMENT
    FOR THE YEAR ENDED DECEMBER 31, 2010
    Revenues
    Sales $1,400,000
    Rental revenue 28,000
    Total revenues $1,428,000

    Expenses
    Cost of goods sold 600,000
    Selling expenses 200,000
    Administrative expenses 170,000
    Total expense 970,000

    Income from continuing operations before tax 458,000
    Income tax 131,000
    Income from continuing operations $327,000
    Discontinued operations
    Loss on discountinued operations 50,000.00
    Less: income tax reduction $18,000.00 $32,000.00
    Income before extaordinary items $359,000.00
    Extraordinary items:
    Extraordinary gain $67,000
    Less: income tax $23,000 $44,000
    $315,000.00
    Extraordinary loss $40,000
    Less: income tax reduction $8,000 $32,000
    Net income $283,000.00
    Can some one please help me with this, I have tried to see what the tax rate is to see if my amounts are correct, we were not given the tax rate either, so I do not know how to check my numbers. Thank you
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #2

    Apr 11, 2010, 10:46 PM

    There are two points relevant:
    1. The trail balance does not agree. Debits are more than credits
    2. You have added $32,000 loss from discontinued operations instead of deducting it.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #3

    Apr 15, 2010, 12:30 PM

    In a single step income statement your fisrt line will be a total of your revenues, the seceond line will be a total of your expenses and your third line will be your Gross Profit or Net Income.

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