Q1) The accountant of Whitney Houston Shoe Co. has compiled following information from company's records as a basis for income statement for year ended December 31, 2007.
| Rental revenue |
$29,000 |
| Interest on notes payable |
18,000 |
| Market appreciation on land above cost |
31,000 |
| Wages and salaries-sales |
114,800 |
| Materials and supplies-sales |
17,600 |
| Income tax |
37,400 |
| Wages and salaries-administrative |
135,900 |
| Other administrative expenses |
51,700 |
| Cost of goods sold |
496,000 |
| Net sales |
980,000 |
| Depreciation on plant assets (70% selling, 30% administrative) |
65,000 |
| Cash dividends declared |
16,000 |
There were 20,000 shares of common stock outstanding during the year.
(a) Create a multiple-step income statement.
(b) Create a single-step income statement.
(c) What format do you prefer? describe.