Response to the following problem:
On January 31, 2006, the balances of the accounts appearing in the ledger of Calloway Company, a furniture wholesaler, are as follows:
Administrative Expenses $ 80,000 Office Supplies $ 10,600
Building 512,500 Retained Earnings 528,580
Capital Stock 100,000 Salaries Payable 3,220
Cash 48,500 Sales 925,000
Cost of Merchandise Sold 560,000 Sales Discounts 20,000
Dividends 25,000 Sales Returns and Allowances 60,000
Interest Expense 7,500 Selling Expenses 120,000
Merchandise Inventory 130,000 Store Supplies 7,700
Notes Payable 25,000
a. Prepare a multiple-step income statement for the year ended January 31, 2006.
b. Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.