Exercise - Multiple- Step Income Statement
On July 31, 2012, th the balances of the accounts appearing in the ledger of Vagabond Furnishings Company, a furniture wholesaler, are as follows:
|
Administrative Expenses
|
$250,000
|
Office Supplies
|
$ 21,200
|
|
Building
|
1,234,000
|
Retained Earnings
|
937,600
|
|
Capital Stock
|
200,000
|
Salaries Payable
|
6,000
|
|
Cash
|
97,000
|
Sales
|
3,200,000
|
|
Cost of Merchandise Sold
|
1,700,000
|
Sales Discounts
|
60,000
|
|
Dividends
|
50,000
|
Sales Returns and Allowances
|
190,000
|
|
Interest Expense
|
15,000
|
Selling Expenses
|
410,000
|
|
Merchandise Inventory
|
360,000
|
Store Supplies
|
15,400
|
|
Notes Payable
|
50,000
|
|
|
a) Prepare a multiple-step income statement for the year ended July 31, 2012.
b) Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.