Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2012 information related to Webster Company ($000 omitted).

Administrative expense

Officers’ salaries $ 4,900

Depreciation of office furniture and equipment 3,960

Cost of goods sold 63,570

Rent revenue 17,230

Selling expense

Transportation-out 2,690

Sales commissions 7,980

Depreciation of sales equipment 6,480

Sales revenue 96,500

Income tax expense 7,580

Interest expense 1,860

Instructions

(a) Prepare an income statement for the year 2012 using the multiple-step form. Common shares outstanding for 2012 total 40,550 (000 omitted).

(b) Prepare an income statement for the year 2012 using the single-step form.

(c) Which one do you prefer? Discuss.