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 Metlock Company ($000 omitted).

Administrative expense
Officers' salaries		$5,401
Depreciation of office furniture and equipment		4,461
Cost of goods sold		61,071
Rent revenue		17,731
Selling expense
Delivery expense		3,191
Sales commissions		8,481
Depreciation of sales equipment		6,981
Sales revenue		97,001
Income tax		9,571
Interest expense		2,361

Common shares outstanding for 2020 total 26,428 (000 omitted).

(a)

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.)

Answer 1

Multiple step income statement

Sales revenue		97001
Cost of goods sold		61071
Gross profit		35930
Operating expense
Administrative expense
Officers' salaries	5401
Depreciation of office furniture and equipment	4461	9862
Selling expense
Delivery expense	3191
Sales commissions	8481
Depreciation of sales equipment	6981	18653
Total operating expense		28515
Operating income		7415
Other revenue
Rent revenue	17731
Other expense
Interest expense	-2361	15370
Income before tax		22785
Income tax		9571
Net income		13214
Share outstanding		26428
EPS		0.50