Two accountants for the firm of Elwes and Wright are arguing about the merits of

Question

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 expense

Officers' salaries $5,523

Depreciation of office furniture and equipment 4,583

Cost of goods sold 61,193

Rent revenue 17,853

Selling expense

Delivery expense 3,313

Sales commissions 8,603

Depreciation of sales equipment 7,103

Sales revenue 97,123

Income tax 9,693

Interest expense 2,483

Common shares outstanding for 2014 total 39,850 (000 omitted).

1)Prepare an income statement for the year 2014 using the multiple-step form.

2)Prepare an income statement for the year 2014 using the single-step form

Explanation / Answer

Income Statement for the period ended Dec 31 2014

$ $ Sales Revenue 97,123 Cost of goods sold 61,193 Gross margin 35,930 Operating expenses Officers' salaries 5,523 Sales commission 8,603 Delivery expense 3,313 Depreciation - office furniture and equipment 4,583 Depreciation- sales equipment 7,103 29,125 Operating income 6,805 Other income Rent revenue 17,853 Interest expense (2,483) 15,370 Earnings before tax 22,175 Income tax 9,693 Net income 12,482 Common shares outstanding 39,850 Earnings per share 0.31

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