The accountant of Buffalo Shoe Co. has compiled the following information from t

Question

The accountant of Buffalo Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2017.

There were 21,270 shares of common stock outstanding during the year.

Rent revenue $30,100 Interest expense 19,100 Market appreciation on land above cost 32,100 Salaries and wages expense (selling) 115,900 Supplies expense (selling) 18,700 Income tax 38,500 Salaries and wages expense (administrative) 137,000 Other administrative expenses 52,800 Cost of goods sold 497,100 Net sales 981,100 Depreciation on plant assets (70% selling, 30% administrative) 66,100 Cash dividends declared 17,100

Explanation / Answer

Multi-Step and single step Income statement is as prepared below:

Multiple step Income statement includes all the revenue, gains, expenses and losses on the income statement itself.

Single Step Income Statement consists of only two parts: revenue and expenses.

First revenues are shown and then all the expenses are deducted from revenues to arrive at Net Income/loss.

Buffalo Shoe Co. Income Statement For the year ended December 31, 2017 Sales 981,100 Less: Cost of goods sold 497,100 Gross profit 484,000 Operating Expense Selling expense    Salaries and Wages 115,900    Depreciation on plant (70% of 66,100) 46270    Supplies exp 18,700 180,870 General and Administrative expenses    Salaries and Wages 137,000    Depreciation on plant (30% of 66,100) 19,830    Other admin exp 52,800 209,630    Total expenses 390,500 Operating Income 93,500 Add: Other Income and gains Rent Revenue 30,100 Less: Other expenses and losses Interest expense 19,100 Income before Income tax 104,500 Income tax 38,500 Net income 66,000 Earning per share (66,000/21,270) 3.1

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