Question

Problem 2-6 Single-Step Income Statement LO5 The following income statement items, arranged in alphabetical order, are taken from the records of Shaw Corporation for the current year: $ 1,500 2,415 29.200 $ 1.400 + 1,340 6.700 Advertising expense Commissions expense Cost of goods sold Depreciation expense-office building Income tax expense Insurance expense- salesperson's auto Interest expense Interest revenue Rent revenue Salaries and wages expense-office Sales revenue Supplies expense-office 2,900 1,540 12,560 48,300 890 2,250 Required 1. Prepare a single-step income statement for the current year. 2. What weaknesses do you see in this form for the income statement?

Answer 1

Shaw Corporation 48300 1340 6700 56340 Statement of Income For the period ending Current Year Revenues: Sales revenue Interest revenue Rent revenue Total revenues Expenses: Advertising expense Commissions expense Cost of goods sold Depreciation expense-office building Income tax expense Insurance expense-salesperson's auto Interest expense Salaries and wages expense - office Supplies expense - office Total expenses Net income 1500 2415 29200 2900 1540 2250 1400 12560 890 54655 1685 Weakness of single step income statement: 1. Information not systematically documented 2.It does not segregate activities 3.It does not provide details in reporting