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

Question

Two accountants for the firm of Allen 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 2012 information related to Webster Company ($000 omitted).

Administrative expense
Officer's salaries $ 5,320
Depreciation of office furniture and equipment 4,460
Cost of goods sold 60,950
Rental revenue 18,060
Selling expense
Transportation-out 2,690
Sales commissions 7,980
Depreciation of sales equipment 6,480
Sales 97,620
Income tax 9,070
Interest expense 1,860

b) Prepare an income statement for the year using SINGLE-step form????

Explanation / Answer

Income statement

Sales 97620

- COGS 60950

Gross profit 36670

Add: rental rev. 18060

-Expenses

Depreciation 4460

office salary 5320

Transportation 2690

Sales comm. 7980

Interest exp 1860

Income tax 9070

Net profit 23350

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