Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Income statements can be presented using two formats: a single-step statement and a multiple-step statement. The single-step income statement emphasizes an organization's total revenues and

image text in transcribed
image text in transcribed
image text in transcribed
Income statements can be presented using two formats: a single-step statement and a multiple-step statement. The single-step income statement emphasizes an organization's total revenues and total expenses and uses a single calculation to determine its bottom line (net income). In contrast, the multiple-step income statement groups various revenue and expense accounts and uses several calculations to provide the reader with important subtotals, including the company's gross profit, operating expenses, and earnings before taxes. As a knowledgeable business professional, you'll rarely be able to anticipate which type of income statement you may be required to analyze. For this reason, it is essential that you are familiar with both formats. For example, Lewis Company's end-of-year income statement data is listed in the following table. However, its management team would prefer to see the data organized into both a multiple-step and a single-step income statement. Account Sales salaries expense Advertising expense Depreciation expense Interest revenue Miscellaneous selling expense Office salaries expense Balance $115,730 35,050 22,930 28,355 13,665 103,495 Account Interest expense Cost of goods sold Insurance expense Delivery expense Sales Income tax expense Balance $40,915 846,705 19,105 19,125 1,357,220 42,760 Use the data given to construct both the single-step and multiple-step statements in proper form. In each statement, enter the account names by choosing from the selection lists, and enter the appropriate numerical data directly into the spaces provided. Lewis Company Income Statement (Single-Step Format) For the Year Ended December 31 Revenues Sales Total revenues Expenses 846,705 Sales salaries expense Office salaries expense 35,050 Use the data given to construct both the single-step and multiple-step statements in proper form. In each statement, enter the account names by choosing from the selection lists, and enter the appropriate numerical data directly into the spaces provided. Lewis Company Income Statement (Single-Step Format) For the Year Ended December 31 Revenues Sales Total revenues Expenses 846,705 Sales salaries expense Office salaries expense 35,050 Delivery expense 22,930 Insurance expense 24,680 Miscellaneous selling expense 40,915 Income tax expense Total expenses Net Income The multiple-step income statement, to be completed below, is designed to provide greater detail than that provided by the single-step statement. Lewis Company Income Statement (Multiple-Step Format) For the Year Ended December 31 Gross profit Operating expenses: Selling expenses Total selling expenses General and administrative (G8A) expenses Total G&A expenses Total operating expenses Income from operations Other revenues and expenses II Excess of other expenses over other revenues Income before income taxes Net income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Finance

Authors: John Fred Weston, Eugene F. Brigham, John Boyle, Robin John Limmack

1st Edition

0039101975, 978-0039101978

More Books

Students also viewed these Finance questions

Question

What considerations are used by the FASB in setting GAAP? p-968

Answered: 1 week ago

Question

Buddy Dog Foods management to change its focus?

Answered: 1 week ago