Exercise 4-5 Two accountants for the firm of Elwes and Wright are arguing about
ID: 2568141 • Letter: E
Question
Exercise 4-5 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 Sweet Company ($000 omitted). $5,207 4,267 60,877 17,537 Officers' salaries Depreciation of office furniture and equipment Cost of goods sold Rent revenue Selling expense 2,997 8,287 6,787 96,807 9,377 2,167 Delivery expense Sales commissions Depreciation of sales equipment Sales revenue Income tax Interestexpense Common shares outstanding for 2017 total 4D,550 (O00 omitted)Explanation / Answer
Multistep Income Statement
For the year ended December 31, 2017
Sales Revenue
96807
Cost of Goods Sold
60877
Gross Profit
35930
Operating Expenses
Selling Expenses
Delivery Expenses
2997
Sales Commission
8287
Depreciation of Sales Equipment
6787
Administrative/General Expenses
Officers Salaries
5207
Depreciation of Office furniture and Equipment
4267
Income from Operations
8385
Other Revenues and gains
Rent Revenue
17537
Other Expenses and Losses
Interest Expense
2167
Income before Taxes
23755
Income Tax
9377
Net Income
14378
Number of Shares
40550
Earnings Per Share (14378/40550)
0.355
Single step Income Statement
For the year ended December 31, 2017
Revenues
Net Sales
96807
Rent Revenue
17537
Total Revenue
114344
Expenses
Cost of Goods Sold
60877
Officers Salaries
5207
Depreciation
11054
Delivery Expenses
2997
Interest Expense
2167
Sales Commission
8287
Total Expenses
90589
Multistep Income Statement
For the year ended December 31, 2017
Sales Revenue
96807
Cost of Goods Sold
60877
Gross Profit
35930
Operating Expenses
Selling Expenses
Delivery Expenses
2997
Sales Commission
8287
Depreciation of Sales Equipment
6787
Administrative/General Expenses
Officers Salaries
5207
Depreciation of Office furniture and Equipment
4267
Income from Operations
8385
Other Revenues and gains
Rent Revenue
17537
Other Expenses and Losses
Interest Expense
2167
Income before Taxes
23755
Income Tax
9377
Net Income
14378
Number of Shares
40550
Earnings Per Share (14378/40550)
0.355
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