Question

McDonald Marina provides docking and cleaning services for pleasure boats at its marina in southern Florida. The following account balances are available:

Accounts payable	$ 26,400	Interest expense	$ 236,000
Accounts receivable	268,700	Interest payable	18,000
Accumulated depreciation (building)	64,500	Land	875,000
Accumulated depreciation (equipment)	950,400	Rent expense	14,600
Bonds payable (due 2024)	2,000,000	Rent payable	2,400
Building	197,300	Retained earnings, 12/31/2018	128,600
Cash	22,300	Service revenue (cleaning)	472,300
Common stock (40,000 shares)	600,000	Service revenue (docking)	1,460,000
Depreciation expense (building)	21,500	Supplies	9,800
Depreciation expense (equipment)	246,300	Supplies expense	89,100
Dividends	25,300	Utilities expense	239,400
Equipment	2,490,000	Wages expense	987,200
Income taxes expense	21,700	Wages payable	21,600

Required:

1.	Prepare a single-step income statement, a retained earnings statement, and a classified balance sheet for the year ended December 31, 2019.
2.	Conceptual Connection: How would a multiple-step income statement be different from the single-step income statement you prepared for McDonald Marina?

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Labels and Amount Descriptions

Labels
Current assets
Current liabilities
December 31, 2019
Expenses
For the year ended December 31, 2019
Long-term liabilities
Property, plant, and equipment
Revenues
Stockholders’ equity
Amount Descriptions
Dividends
Net income
Net loss
Retained earnings, December 31, 2019
Retained earnings, January 1, 2019
Total assets
Total current assets
Total current liabilities
Total expenses
Total liabilities
Total liabilities and stockholders’ equity
Total property, plant, and equipment
Total service revenues
Total stockholders’ equity

Answer 1

1.

MCDONALD MARINA
Income Statement
For the Year Ended December 31, 2019
Revenues
Service revenue - Cleaning	472300
Service revenue - Docking	1460000
Total service revenues		1932300
Expenses
Depreciation expense-building	21500
Depreciation expense-equipment	246300
Rent expense	14600
Supplies expense	89100
Utilities expense	239400
Wages expense	987200
Interest expense	236000
Income taxes expense	21700
Total expenses		1855800
Net income		76500

MCDONALD MARINA
Retained Earnings Statement
For the Year Ended December 31, 2019
Retained earnings, January 1, 2019	128600
Add: Net income	76500
	205100
Less: Dividends	25300
Retained earnings, December 31, 2019	179800

MCDONALD MARINA
Balance Sheet
December 31, 2019
Assets
Current assets
Cash		22300
Accounts receivable		268700
Supplies		9800
Total current assets			300800
Property, plant, and equipment
Land		875000
Building	197300
Less: Accumulated depreciation	64500	132800
Equipment	2490000
Less: Accumulated depreciation	950400	1539600
Total property, plant, and equipment			2547400
Total assets			2848200
Liabilities
Current liabilities
Accounts payable	26400
Interest payable	18000
Rent payable	2400
Wages payable	21600
Total current liabilities		68400
Long-term liabilities
Bonds payable		2000000
Total liabilities			2068400
Stockholders' equity
Common stock		600000
Retained earnings		179800
Total stockholders' equity			779800
Total liabilities and stockholders' equity			2848200

2. While the single step income statement shows the total revenues, total expenses, and the net income, the multiple step income statement shows the gross profit, operating expenses, operating income, other incomes and expenses and the net income separately. The multiple step income statement is thus more detailed in its presentation than the single step income statement.