Chapter 4, Problem 22AE

Preparing a single-step income statement (Learning Objective 6) 10-15 min.

The account balances for Spark’s Electrical Supply, Inc., for the year ended August 31, 2018, are presented next in random order:

Cash......................................................	$ 6,450
Equipment............................................	48,800
Accounts Payable.................................	5,800
Common Stock....................................	35,000
Long-Term Notes Payable...................	10,000
General Expenses................................	24,500
Salaries Payable..................................	1,450
Supplies..............................................	950
Building..............................................	135,000
Estimated Refund Liability...................	2,300
Prepaid Rent.........................................	1,750
Interest Expense....................................	750
Retained Earnings.................................	40,450

Cost of Goods Sold.....................................................	$123,700
Accumulated Depreciation, Equipment......................	13,700
Unearned Revenues....................................................	2,350
Sales Revenue.............................................................	271,600
Accounts Receivable.....................................................	5,100
Accumulated Depreciation, Building............................	38,000
Mortgage Payable (Long-Term)...................................	25,900
Dividends.......................................................................	45,000
Estimated Inventory Returns.........................................	1,500
Selling Expenses............................................................	37,000
Inventory.......................................................................	16,050

Requirements

1. 1. Prepare Spark’s Electrical Supply, Inc.’s single-step income statement.
2. 2. Would you recommend the use of the single-step income statement format by a merchandiser? Why?