Question 1BE - Intermediate Accounting (Kieso)

Question

Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:

Cost of goods sold        \)330,000

Salaries and wages expense 120,000

Income tax expense 25,000

Increase in value of company reputation 15,000

Other operating expenses 10,000

Unrealized gain on value of patents 20,000

Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.

Step-by-Step Solution

Answer

The Net Income for Starr Co. is $55,000.

Meaning of Single Step Income Statement

The single-step income statement reports all income together and all expenses together for computing net income.

Preparing Income statement for Starr for 2017.

Starr Company
Income statement
Year Ended December 31, 2017
Sales Revenue	$540,000
Total Revenues (A)	$540,000
Less:  Expenses
Cost of Goods Sold	$330,000
Salaries and wages	$120,000
Other operating expenses	$10,000
Income Tax Expenses	$25,000
Total Expenses (B)	$485,000
Net Income (A-B)	$55,000
Earnings Per Share	$0.55