E4-9 Multiple-step income statement:

In October 31, 20Y5, the balances of the accounts appearing in the ledger of Quality Interiors Company, a furniture wholwsaler, are as follows:

Administrative expenses $600,000 Office supplies $5,000

building $2,000,000 retained earnings $903,000

capital stock $300,000 salaries payable $12,000

cash $175,000 sales $5,000,000

cost of merchandise sold $2,500,000 Sales discounts $400,000

dividends $20,000 sales returns and allowances $100,000

interest expense $50,000 selling expenses $850,000

merchandise inventory $400,000 store supplies $15,000

notes payable $900,000

Instructions:

a. Prepare a multiple-step income statement for the year ended October 31, 20Y5.

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

Income statement for merchandiser:

For the fiscal year, sales were $12,140,000, sales discounts were $250,000, sales returns and allowances were $80,000, and cost of merchandise sold was $7,000,000.

Instructions:

a. What was the amount of net sales?

b. What was the amount of gross profit?