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?