(Multiple-Step and Single-Step) 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 $ 4,900
Depreciation of office furniture and equipment 3,960
Cost of goods sold 60,570
Rent revenue 17,230
Delivery expense 2,690
Sales commissions 7,980
Depreciation of sales equipment 6,480
Sales revenue 96,500
Income tax 9,070
Interest expense 1,860
(a) Prepare an income statement for the year 2014 using the multiple-step form. Common shares out-standing for 2014 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2014 using the single-step form.(c) Which one do you prefer? Discuss.