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-ste
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).
\r\nAdministrative expense
\r\nOffi cers’ salaries $ 4,900
\r\nDepreciation of offi ce furniture and equipment 3,960
\r\nCost of goods sold 60,570
\r\nRent revenue 17,230
\r\nSelling expense
\r\nDelivery expense 2,690
\r\nSales commissions 7,980
\r\nDepreciation of sales equipment 6,480
\r\nSales revenue 96,500
\r\nIncome tax 9,070
\r\nInterest expense 1,860
\r\nInstructions
\r\n(a) Prepare an income statement for the year 2014 using the multiple-step form. Common shares outstanding for 2014 total 40,550 (000 omitted).
\r\n(b) Prepare an income statement for the year 2014 using the single-step form.
\r\n(c) Which one do you prefer? Discuss.