Exercise 4-5 Two accountants for the firm of Elwes and Wright are arguing about

Question

Exercise 4-5 Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2017 information reated to Riverbed Company($000 omitted) Administrative expense $5,168 4,228 60,838 17,498 Officers' salaries Depreciation of office furniture and equipment Cost of goods sold Rent revenue Selling expense 2,958 8,248 6,748 96,768 9,338 2,128 Delivery expense Sales commissions Depreciation of sales equipment Sales revenue Income tax Interest expense Common shares outstanding for 2017 total 40,550 (000 omitted) Prepare an income statement for the year 2017 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Explanation / Answer

RIVERBED COMPANY INCOME STATEMENT for the year ended 2017 Sales Revenue 96,768 Cost of goods sold -60,838 Gross profit 35,930 Operating Expenses: Selling expenses Delivery expenses -2,958 Sales commissions -8,248 Depreciation of sales equipment -6,748 Administration Expenses Office salaries -5,168 Depreciation of office furniture and equipment -4,228 Income from operation 8,580 Other Revenues and gains Rent Revenue 17,498 26,078 Other Expenses and Losses Interest Expenses -2,128 Income before taxes 23,950 Income taxes -9,338 Net income 14,612

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