4. Merchandising Operations
Single-step Income Statement
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Alright. So now let's form an income statement and let's start with a really simple one, the single step income statement. So single step income statement, like I said, it's it's pretty simple. All we do is we're gonna show all our revenues first, then all our expenses, and then finally calculate net income. Okay. So revenues minus expenses equals net income. This is a pretty standard equation that we're used to. So let's go ahead and just dive right in and let's create a single step income statement. Okay. So they gave us all this information for the month of November. Right? We've got sales revenue, accounts payable, wage expense, bunch of stuff here. Right? So we want to pick and choose our revenues first, then show all our expenses, and then finally calculate net income. Alright. So let's start with all our revenues. Notice we've got sales revenue, accounts payable, wages expense, interest expense, dividends, service revenue, cash collected from customers on account. So notice those are our 2 revenue accounts. Right? Cash collected from customers on account, this is collecting accounts receivable. That has nothing to do with revenue. Right? So let's put in our revenue. Sales revenue and service revenue. Sales revenue of 30 300,000, service revenue of 18,000. So we would write it in sales revenue and we would put over here 300,000 and then service revenue for 18,000. At this point, we could show a total total revenues. Alright. And we would just add these up. We get 318 1,000. Alright. 318,000. Let me fix this 3 a little bit. Cool. And then we just got to put all our expenses in here. So we've got a bunch of things but let's just go 1 by 1. When we do a when we do a single step income statement, it's just get all the expenses in there. So I'm gonna circle them in blue. We have our wage expense, our interest expense. How about dividends? Dividends are not an expense. Right? Dividends are not an expense. So wage expense, interest expense, cost of goods sold is an expense, income tax expense, and other general and administrative expenses. Notice, all of those say expense except for cost of goods sold. Right? Cost of goods sold is a special case, but it is an expense. Alright. So let's go ahead and go 1 by 1. Let's start wage expense 35,000. And I'm gonna put EXP to save time. Wage expense 35,000. What's the next one? Interest expense for 6,000. And I'll put int expense. Just saving a little time. 6,000. Alright. What's the next one? Cost of goods sold for a 180,000. COGS was a 180,000. Alright. Next one, income tax expense for 12,000. I'm just gonna put tax expense. What was it? 12,000, I think. Let me check. Yep. And then our last one, other general and administrative expenses, 48,000. So other I'm just gonna put other expenses, 48,000. Okay. Just to save time. Obviously, if we're really making a full one, we would write all these things out. Right? Other general administrative expenses blah blah blah. So let's go ahead and get our total expenses here. So we just gotta add all these up. Let's see. 35,000 plus 6,000 plus a 180,000 plus 12,000 plus 48,000. Cool. That comes out to 281,000. And then the last thing is our net income. So net income is just gonna be those total revenues minus total expenses. 318,000 minus 281,000 is 37,000. So 37,000 that is our bottom line and that is our net income. Cool? So there you go. That is our single step income statement. Pretty straightforward. Just show your revenues, then show all your expenses, and calculate net income. Cool? Let's move on to the next video.
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