E4-9:Multiple-step income statement

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

Administrative Expenses

$600,000

Building

2,000,000

Capital Stock

300,000

Cash

175,000

Cost of Merchandise Sold

2,500,000

Dividends

20,000

Interest Expense

50,000

Merchandise Inventory

400,000

Notes Payable

900,000

Office Supplies

$5,000

Retained Earnings

903,000

Salaries Payable

12,000

Sales

5,000,000

Sales Discounts

400,000

Sales Returns and Allowances

100,000

Selling Expenses

850,000

Store Supplies

15,000

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 of income statements.