Question

Sara Co. had the following account balances: Sales revenue $ 220,000 Cost of goods sold 110,000 Salaries and wages expense 15,000 Depreciation expense 40,000 Dividend revenue 6,000 Utilities expense 12,000 Rent revenue 30,000 Interest expense 18,000 Sales returns and allow. 16,500 Advertising expense 19,500 What would Sara report as total expenses in a single-step income statement?

Answer 1

Answer:

Sara Co total expenses in a single-step income statement is $231000 as found in the attached

Explanation:

Single-step income statement gives the net profit of a business by deducting total expenses from total revenue.

It differs from two-step income statement where  revenue expenses are categorized into, namely direct and indirect,which enables the gross profit and net profit to be calculated differently.

Since total revenue for Sara Co from all sources is $256,000,the resultant net profit for the year is $25000($256000-$231000).