Question - Multiple-Step Income Statement
On December 31, 2012, the balances of the accounts appearing in the ledger of Warm Place Furnishings Company, a furniture wholesaler, are as follows:
|
Administrative Expenses
|
$307,800
|
Office Supplies
|
$25,900
|
|
Building
|
1,263,900
|
Retained Earnings
|
1,253,000
|
|
Capital Stock
|
150,000
|
Salaries Payable
|
7,400
|
|
Cash
|
119,900
|
Sales
|
3,141,300
|
|
Cost of Merchandise Sold
|
1,726,400
|
Sales Discounts
|
49,600
|
|
Dividends
|
61,400
|
Sales Returns and Allowances
|
197,600
|
|
Interest Expense
|
18,500
|
Selling Expenses
|
505,400
|
|
Merchandise Inventory
|
320,400
|
Store Supplies
|
19,200
|
|
Notes Payable
|
72,500
|
|
|
a. Prepare a multiple-step income statement for the year ended December 31, 2012.
b. Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.