Counting Crows Inc. provided the following information for the year 2025.

Accounting

Prepare 

(a) A single-step income statement for 2025, 

(b) A retained earnings statement for 2025 and 

(c) A statement of comprehensive income using the two statement format. Shares outstanding during 2025 were 100,000.

Analysis

Explain how a multiple-step income statement format can provide useful information to a financial statement user.

Principles

In a recent meeting with its auditor, Counting Crows’ management argued that the company should be able to prepare a non-GAAP income statement with some one-time administrative expenses reported similar to discontinued operations. Is such reporting consistent with the qualitative characteristics of accounting information as discussed in the conceptual framework? Explain.

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Retained earnings, January 1, 2025 Administrative expenses Selling expenses Sales revenue Cash dividends declared Cost of goods sold Loss on discontinued operations Rent revenue Unrealized holding gain on available-for-sale debt securities Income tax applicable to continuing operations Income tax benefit applicable to loss on discontinued operations Income tax applicable to unrealized holding gain on available- for-sale debt securities $ 600,000 240,000 300,000 1,900,000 80,000 850,000 110,000 102,700 17,000 187,000 60,500 2,000