(Multiple Step and Single Step) Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple step versus a single step format. The discussion involves the following 2012 information related to Webster Company ($000 omitted).
|
Administrative expense |
|
|
Officers’ salaries |
$ 4,900 |
|
Depreciation of office furniture and equipment |
3,960 |
|
Cost of goods sold |
63,570 |
|
Rent revenue |
17,230 |
|
Selling expense |
|
|
Transportation out |
2,690 |
|
Sales commissions |
7,980 |
|
Depreciation of sales equipment |
6,480 |
|
Sales revenue |
96,500 |
|
Income tax expense |
7,580 |
|
Interest expense |
1,860 |
Instructions
(a) Prepare an income statement for the year 2012 using the multiple step form. Common shares outstanding for 2012 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2012 using the single step form.
(c) Which one do you prefer? Discuss.