On October 31, 2016, the balances of the accounts appearing in the ledger of Pre
ID: 2545477 • Letter: O
Question
On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows:
What is a major advantage of the multiple-step income statement over the single-step income statement?
Labels For the Year Ended October 31, 2016,October 31, 2016,Operating expenses,Other income and expense
Amount Descriptions Gross profit,Income from operations,Net income,Net loss,Total assets,Total liabilities,Total operating expenses,Total stockholders’ equity
A. Prepare a multiple-step income statement for the year ended October 31, 2016. Be sure to complete the statement heading. Refer to the information given in the exercise and to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. In the Other income and expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.
Prestige Furnishings Company
Prestige Furnishings Company
Income Statement
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Accumulated Depreciation-Building $752,300 Administrative Expenses 540,650 Building 2,553,550 Cash 167,750 Common Stock 288,000 Cost of Merchandise Sold 3,899,650 Dividends 178,650 Interest Expense 10,150 Merchandise Inventory 1,006,950 Notes Payable 255,800 Office Supplies 20,400 Retained Earnings 1,304,450 Salaries Payable 7,600 Sales 6,477,150 Selling Expenses 684,100 Store Supplies 92,400Explanation / Answer
1)
PRESTIGE FURNISHINGS
INCOME STATEMENT
FOR THE PERIOD ENDED OCTOBER 31 2016
2)
The major advantage of multistep income statement is that it provides detailed explanation of each and every item on Income statement (in the sense which item is contributing how much percentage to net income).
PRESTIGE FURNISHINGS
INCOME STATEMENT
FOR THE PERIOD ENDED OCTOBER 31 2016
sales 6477150 cost of merchandise sold (3899650) Gross margin 2577500 less:selling and administrative expense selling expense 684100 administrative expense 540650 Total selling and administrative expense (1224750) Income from operations 1,352,750 Other income /(expense) Interest expense (10150) Income from continuing operations (before tax) 1,342,600Related Questions
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