Multiple-Step Income Statement On March 31, 2019, the balances of the accounts a

Question

Multiple-Step Income Statement

On March 31, 2019, the balances of the accounts appearing in the ledger of Racine Furnishings Company, a furniture wholesaler, are as follows:

a. Prepare a multiple-step income statement for the year ended March 31, 2019.

b. What is a major advantage of the multiple-step income statement over the single-step income statement?.

Accumulated Depreciation—Building $729,200 Merchandise Inventory $1,011,150 Administrative Expenses 552,300 Notes Payable 240,350 Building 2,445,350 Office Supplies 20,200 Cash 172,550 Salaries Payable 7,900 Cost of Merchandise Sold 3,626,700 Sales 6,646,300 Interest Expense 10,150 Selling Expenses 720,200 Kathy Melman, Capital 1,596,700 Store Supplies 92,500 Kathy Melman, Drawing 176,000

Explanation / Answer

a.

b.

multiple step income statement reports operating revenues and expenses seperately from non operating expenses and revenues and other gain and losses. By this it gives enhanced user information which users can you use to calculate mutliple ratios.

Particulars Amount Amount Sales        66,46,300 Cost of goods sold        36,26,700 Gross profit        30,19,600 Expenses: Administrative expenses           5,52,300 Selling expenses           7,20,200 Total expenses        12,72,500 Income from operations        17,47,100 Other expense Interest expense              10,150 Net income        17,36,950

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