Two accountants for the firm of Elwes 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 2014 information related to P. Bride Company ($000 omitted).
|
Administrative expenses |
|
|
Officers’ salaries |
$4,900 |
|
Depreciation of office furniture and equipment |
3,960 |
|
Cost of goods sold |
60,570 |
|
Rent revenue |
17,230 |
|
Selling expenses |
|
|
Transportation-out |
2,690 |
|
Sales commissions |
7,980 |
|
Depreciation of sales equipment |
6,480 |
|
Sales |
96,500 |
|
Income tax |
9,070 |
|
Interest expense |
1,860 |
Instructions
(a) Prepare an income statement for the year 2014 using the multiple-step form. Common shares outstanding for 2014 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2014 using the single-step form. Common shares outstanding for 2014 total 40,550 (000 omitted).
(c) Which one do you prefer? Discuss.
