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 2017 information related to Wildhorse Company ($000 omitted).
Administrative Expense
Officers'
salaries.
$ 4,990
Depreciation of office furniture and
equipment
$4,050
Cost of goods
sold.
60,660
Rent
Revenue.
17,320
Selling
expense.
Delivery
expense.
2,780
Sales
Commissions.
8070
Depreciation of sales
equipment.
6,570
Sales
Revenue.
96,590
Income
tax.
9,160
Interest
expense.
1,950
Common shares outstanding for 2017 total 40,550 (000 omitted).
a. Prepare an incomestatement for the year 2017 using
the multiple-step form
Income Statement using Multiple Step Form
Particulars | Amount |
i. Sales | 96590 |
ii. Less : Cost of goods sold | (60660) |
iii. Gross Profit (i-ii) | 35930 |
iv. Operating Expenses(9040+17420)
Officers' salaries = 4990 Depreciation of office furniture and equipment = 4050
Delivery expense = 2780 Sales Commissions = 8070 Depreciation of sales equipment = 6570 |
26460 |
v. Operating income (iii-iv) | 9470 |
vi. Other Incomes and Expenses
|
15370 |
vii Net Income (v+vi) | 24840 |
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