Exercises 183 L The beginning m rchandise inventory was S92A00 and decreased 20%

Question

Exercises 183 L The beginning m rchandise inventory was S92A00 and decreased 20% during the curint year. 2 Sales discoures amount to $17/000 20,00 share of amnen sa« k were outstanding for the entire year. LIntenstexpense was 523000 ne income tax rate is 30% 6 Cost of goods sold amounts to $50000 ?. Adeinisrative expense-are 20% of ase of gods sold but only nofprss sales & Four-fifths of the operating expenses relate to salkes activities Frem ee kregoing infoemason ptpare an income sulement lor the year 2017 single-step fom. 84-5 poa, EXCEL (Multiple-Step md Single-Step Statements, Two accountrs ir the firm of Elwes and Wright are. arguing about the merits of peesenting an income statement in a mulhiple-step venus a single-step fomat. The discussion involves the following 2017 information elated to P: Bride Company (5oD omitted Oforrs salat Cost of godsol Administrative es peree $ 4900 Rent owvenue Selling es pense Pmpare an income statement for the year 2017 using the mubplesteplom Con man share, oustanding br 2017 toul 0550 (000omited) ic) Which ane do you prefer? Discuss. E4-6 L023,41 OMeltiple-Step Statement The following balances wene taken from the books of Alonzo Corp. on December 31, 2017 Interest sevenue 84000 40000 28000 155000 194000 70p00 o0co Notes woeivable Phepaid insurance Sales netums and allowances Allowance for doultful accound Aocoants paryable Bonds payable Admin iatr ative and general expense Land 2000 nterest expene Noles payable Low from earthquake damage Common slock Retained eamings Buildngs Cost of goods sold 40000 621,000 21000 Assume the total effective tax rate on an items s34% Instructions Prepane a muliple-step income statement: 100,000 shanes of common stock were outstanding during the yar E4-7 LO2,3,4) (Multiple-Step and Single-Step information from the company's econds as a basis for an income stakment for the year ended December 31, 2017 Statements) The accountant of Latila Shoe Co has piled the following Rent reveru Market appnciation on land above cost Salaries and wages espenwe (selling) Supplies (wlling) 29000 18000 ,000 14.800 17 600 ncome tax

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering E4-5 :

E4-5)

c) We will prefer the multi-step Income Statement because it explains us the income at the various levels of operation.

a) Multiple step Income Statement : Sales revenue 96500 Less: COGS -60570 Gross Profit 35930 Less: Selling expenses: Delivery -2690 Sales commi -7960 Income after selling expenses but before depreciation: 25280 Less: Administration expenses: salaries -4900 Income before depreciation, interest and taxes: 20380 Less: Depreciation expenses: Selling -6480 Administration -3960 Income before interest and taxes : 9940 Interest expense -1860 Income before taxes: 8080 Add: Other incomes: Rent revenue 17230 All Income before taxes: 25310 Less: taxation -9070 Net Income 16240 Outstanding common shares 40550 EPS $0.40 b) Single step Income Statement : Sales revenue 96500 Rent revenue 17230 Total revenue 113730 Less: Expenses : COGS -60570 Delivery expenses -2690 Sales commi -7960 Depreciation of sales equipment -6480 officers salaries -4900 Depreciation of office fur & equip -3960 Interest expense -1860 taxation -9070 Total expenses= -97490 Net Income 16240

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