Question
Two accountants for the accounting firm of Mack and Byner are arguing about the merits of presenting an income statement in a multiple-step versus a
Two accountants for the accounting firm of Mack and Byner are arguing about the merits of presenting an income statement in a multiple-step versus a single- step format. The discussion involves the following information related to Fontenot Company for the current year ($000 omitted).
Administrative expense Officers salaries $ 6,860
Depreciation of office furniture 5,544
Cost of goods sold 84,798
Rental revenue 24,122
Selling expense Transportation-out 3,766
Sales commissions 11,172
Depreciation of sales equipment 9,072
Sales 135,100
Income tax 12,698
Interest expense 2,604
Required:
(a) Prepare an income statement for the current year using the single-step form. Average common shares outstanding were 40,550 (000 omitted).
(b) Prepare an income statement for the current year using the multiple-step form.
(c) Which one do you prefer? Explain.
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