The following information is available for Wright Auto Supply at December 31, 2019. Cost of goods sold $292,000 Rent expense $ 21,000
Depreciation expense 31,250 Salaries (administrative) 33,800
Income taxes expense 32,520 Sales revenue 585,600
Interest expense 2,400 Wages expense (salespeople) 96,750
Required:
1. Prepare a single-step income statement for the year ended December 31, 2019.
2. Prepare a multiple-step income statement for the year ended December 31, 2019.
3.
Conceptual Connection: Comment on the differences between the single-step and the multiple-step income statements.
3. Conceptual Connection: Comment on the differences between the single-step and the multiple-step income statements by answering "true or false" to the following:
a. Both a single-step income statement and a multiple-step income statement report the same amount for net income.
b. A single-step income statement provides three important classifications that financial statement users find useful—gross margin, income from operations, and net income.
c.
The only difference between the two formats is how the revenues and expenses are classified.
Labels and Amount Descriptions
Accounts
Cost of goods sold
Depreciation expense
Interest expense
Income taxes expense
Rent expense
Salaries expense
Sales revenue
Wages expense
Labels
Expenses
December 31, 2019
For the year ended December 31, 2019
Operating expenses
Other income and expense
Revenues
Amount Descriptions
Gross margin
Income before income taxes
Income from operations
Net income
Net loss
Total expenses