Business, 22.02.2020 03:29 Darkphyx

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 info related to P. Bride Company. ($000 omitted).Administrative expense $Officers' salaries 4,900Depreciation of office furniture and equipment 3,960Cost of goods sold 60,570Rent revenue 17,230Selling expense Delivery expense 2,690Sales commissions 7,980Depreciation of sales equipment 6,480Sales revenue 96,500Income tax 9,070Interest expense 1,860Required:(a) Prepare income statement for the year 2014 using the mutiple-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.

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Answer from: jobana

Explanation:

A) Multiple Step Income Statement

Sales 96500

Cost Of Goods Sold -60570

Gross Profit 35930

Operating Expenses

Admin : Staff Salaries -4900

Deprecation -3960

Selling: Delivery Charges -2690

Commission Charges -7980

Depreciation -6480

Operating Profit 9920

Non-operating Income 17230

Interest Expense -1860

Total Non Operating Income 15370

Total Income (9920+15370) 25290

Income Tax -9070

Net Income After Tax 16220

B)Single Step Income Statement For the year ended 2014

Revenue 96500

Cost Of Goods Sold -60570

Gross profit 35930

Admin Expenses (4900+3960) -8860

Selling Expenses -17150

Operating Profit 9920

Finance Cost -1860

Other Income 17230

Profit before Tax 25290

Income Tax -9070

Profit After Tax 16220

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