Question

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 2020 information related to P. Bride Company ($000 omitted). Administrative expense Officers' salaries $4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 60,570 Rent revenue 17,230 Selling expense Delivery expense 2,690 Sales commissions 7,980 Depreciation of sales equipment 6,480 Sales revenue 96,500 Income tax 9,070 Interest expense 1,860 Common shares outstanding for 2020 total 40,550 (000 omitted). Prepare an income statement for the year 2020 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.) Prepare an income statement for the year 2020 using the single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Ans. 1	P. Bride Company
	Income   Statement
	For the Year Ended December 31, 2020
	Particulars	Amount	Amount	Amount
	Sales revenue			$96,500
	Cost of goods sold			$60,570
	Gross profit			$35,930
	Operating Expenses:
	Selling expenses:
	Delivery	$2,690
	Sales commissions	$7,980
	Depreciation of sales equipment	$6,480
	Total selling expenses		$17,150
	Administrative expenses:
	Office salaries	$4,900
	Depreciation of office furniture and equipment	$3,960
	Total administrative expenses		$8,860
	Total Operating expenses			$26,010
	Income from operations			$9,920
	Other revenues and Gains:
	Rent revenue		$17,230
	Other expenses and losses:
	Interest expenses		($1,860)	$15,370
	Income before income taxes			$25,290
	Less: Income tax			($9,070)
	Net Income			$16,220
	(/) Common shares outstanding			40550
	Earnings per share (EPS)			$0.40
	Earnings per share = Net income / Common shares outstanding
Ans. 2	P. Bride Company
	Income   Statement
	For the Year Ended December 31, 2020
	Particulars	Amount	Amount
	Revenues:
	Sales revenue	$96,500
	Rent revenue	$17,230
	Total revenues (a)		$113,730
	Expenses:
	Cost of goods sold	$60,570
	Delivery	$2,690
	Sales commissions	$7,980
	Depreciation of sales equipment	$6,480
	Office salaries	$4,900
	Depreciation of office furniture and equipment	$3,960
	Interest expenses	$1,860
	Income tax expenses	$9,070
	Total expenses (b)		$97,510
	Net income   (a - b)		$16,220
	(/) Common shares outstanding		40550
	Earnings per share (EPS)		$0.40