On August 31, 2008, the balances of the accounts appearing in the ledger of The Bent Needle Company, a furniture wholesaler, are as follows:
|
Administrative Expenses |
$125,000 |
Notes Payable |
$ 25,000 |
|
Building |
512,500 |
Office Supplies |
10,600 |
|
Cash |
48,500 |
Salaries Payable |
3,220 |
|
Cost of Merchandise Sold |
700,000 |
Sales |
1,275,000 |
|
Interest Expense |
7,500 |
Sales Discounts |
20,000 |
|
Jason Ritchie, Capital |
568,580 |
Sales Returns and Allowances |
80,000 |
|
Jason Ritchie, Drawing |
25,000 |
Selling Expenses |
205,000 |
|
Merchandise Inventory |
130,000 |
Store Supplies |
7,700 |
a. Prepare a multiple step income statement for the year ended August 31, 2008.
b. Compare the major advantages and disadvantages of the multiple step and single step forms of income statements.