Reference no: EM131737230

Question - Multiple step income statement

On Oct. 31, 2016 the balances of the accounts appearing in the ledger of Prestige Furnishings Co. a furniture wholesaler, are as follows:

accumulated Depreciation bldg.   $750,000              Merchandise Inventory          $980,000

administrative expenses              $540,000             notes payable                       $250,000

building                                      $2,500,000          office supplies                       $20,000

cash                                           $175,000            salaries payable                    $8,000

cost of merchandise sold              $3,800,000         sales                                    $6,410,000

interest expense                         $10,000              selling expenses                    $715,000

Jan Brown, capital                       $1,587,000         store supplies                        $90,000

Jan Brown, Drawing                    $175,000

a) Prepare a multiple step income statement for the year ended Oct 31, 2016.

b) Compare the major advantages and disadvantages of the multiple step and single step forms of income statements.