Advertising expense $ 1,500
Commissions expense 2,415
Cost of goods sold 29,200
Depreciation expense”office building 1,540
Income tax expense Insurance expense”salesperson’s
auto 2,250
Interest expense $1,400
Interest revenue 1,340
Rent revenue 6,700
Salaries and wages expense”office 12,560
Sales revenue 48,300
Supplies expense”office 890
Assume that Shaw Corpora- tion classifies all operating expenses into two categories: (1) selling and (2) general and administrative.
1. Prepare a multiple-step income statement for the year ended December 31, 2010.
2. What advantages do you see in this form for the income statement?
3.Compute Shaw’s profit margin.
4.Comment on Shaw’s profitability. What other factors need to be taken into account
to assess Shaw’s profitability?