The account balances for Great Gadget, Inc., for the year ended December 31, 2010, are presented next in random order:

Requirements 1. Prepare Great Gadget’s single-step income statement.
2. Would you recommend the use of the single-step income statement format by a merchandiser? Why?

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Cash.. Equipment... $ 9,300 Cost of Goods Sold. $135,000 39,800 Accumulated Depreciation, Accounts Payable. 6,300 Equipment....... 13,700 Common Stock. 25,000 Unearned Revenues 1,900 Long-Term Notes Payable....... 35,000 Sales Revenue... 257,000 General Expenses. 18,200 Accounts Receivable 4,500 Wages Payable.. 1,300 Accumulated Depreciation, Supplies.. 3,300 Building... 25,900 Building... 130,000 Mortgage Payable Sales Returns and (Long-Term) 43,500 Allowances. 2,900 Dividends.. 41,000 Prepaid Rent 2,600 Sales Discounts 1,500 Retained Earnings... 25,700 Selling Expenses 43,500 Inventory... 3,700