Multiple-step income statement OBJ. 3 On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows:

Accumulated Depreciation—Building $ 750,000 Merchandise Inventory $ 980,000 Administrative Expenses 540,000 Notes Payable 250,000 Building 2,500,000 Office Supplies 20,000 Cash 175,000 Retained Earnings 1,287,000 Common Stock 300,000 Salaries Payable 8,000 Cost of Merchandise Sold 3,800,000 Sales 6,410,000 Dividends 175,000 Selling Expenses 715,000 Interest Expense 10,000 Store Supplies 90,000

a. Prepare a multiple-step income statement for the year ended October 31, 2016.

b. Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.