Behavior Issues

(Multiple-step and Single-step)
Two accountants for the firm of Allen 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 2010 information related to Webster Company ($000 omitted).
  | Administrative expense |   |
  |    Officer's salaries | $   5,150 |
  |    Depreciation of office furniture and equipment | 4,620 |
  | Cost of goods sold | 62,630 |
  | Rental revenue | 22,690 |
  | Selling expense |   |
  |    Transportation-out | 2,690 |
  |    Sales commissions | 7,980 |
  |    Depreciation of sales equipment | 6,480 |
  | Sales | 97,990 |
  | Income tax | 9,070 |
  | Interest expense | 1,860 |

(a) | Prepare an income statement for the year 2010 using the multiple-step form. Common shares outstanding for 2010 total 40,550 (000 omitted). (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.25 and all other answers to zero decimal places, e.g. 2,250. Enter all amounts as positive amounts and subtract where necessary.) |
  |
WEBSTER COMPANY |
Income Statement |
For the Year Ended December 31, 2010 |
-------------------------------------------------
(In thousands, except earnings per share) |
Sales |   |   | $ 97990 |
Cost of goods sold |   |   | -------------------------------------------------
62630 |
      Gross profit |   |   | 35360 |
  |   |   |   |
Operating Expenses |   |   |   |
Selling Expenses |   |   |   |
      Sales commissions | $ 7980 |   |   |
      Depr. of sales equipment | 6480 |   |   |
      Transportation-out | -------------------------------------------------
2690 | 17150 |   |
Administrative expenses |   |   |   |
      Officer's salaries | 5150 |   |   |
      Depr. of office furn. and equip. | -------------------------------------------------
4620 |... [continues]

Read full essay