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 a single-step format. The discussion involves the following 2010 information related to Webster Company ($000 omitted).
Administrative expense $ 4,900
Officer salaries 3,960
Depreciation of office furniture and equipment 63,570
Cost of goods sold 17,230
Sales commissions 7,980
Depreciation of sales equipment 6,480
Income tax 7,580
Interest expense 1,860
(a) Prepare an income statement for the year 2010 using the multiple-step form. Common shares out-standing for 2010 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2010 using the single-step form.
(c) Which one do you prefer? Please discuss.
The soltuon provided strengths and weaknesses of mulit-step or single step income statement.