ch04_sol - Name Solution Date Instructor Course...

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987b4adf2e74f9aa851952442c0257ad6d48389e.xlsx, E4-4 Solution, Page 1 of 8, 03/29/2012, 01:32:14 Name: Solution Date: Instructor: Course: Administrative expenses Officers' salaries $4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 63,570 Rent revenue 17,230 Selling expenses Transportation-out 2,690 Sales commissions 7,980 Depreciation of sales equipment 6,480 Sales 96,500 Income tax 7,580 Interest expense 1,860 Instructions: outstanding for 2012 total 40,550 (000 omitted). WEBSTER COMPANY Multi-Step Income Statement For the Year Ended December 31, 2012 (In thousands, except earnings per share) Sales $96,500 Cost of goods sold 63,570 Gross profit 32,930 Operating Expenses Selling expenses Sales commissions $7,980 Depreciation of sales equipment 6,480 Transportation-out 2,690 $17,150 Administrative expenses Officers' salaries 4,900 Depreciation of office furniture and equipment 3,960 8,860 26,010 Income from operations 6,920 Other Revenues and Gains Rent revenue 17,230 24,150 Other Expenses and Losses Interest expense 1,860 Income before taxes 22,290 Income taxes 7,580 Net income 14,710 Earnings per share ($14,710 net income / 40,550 shares) $0.36 outstanding for 2012 total 40,550 (000 omitted). WEBSTER COMPANY Single-Step Income Statement For the Year Ended December 31, 2012 (In thousands, except earnings per share) Revenues Net sales $96,500 Rental revenue 17,230 Total revenues 113,730 Expenses Cost of goods sold $63,570 Selling expenses 17,150 Administrative expenses 8,860 Interest expense 1,860 Total expenses $91,440 Income before taxes 22,290 Income taxes 7,580 Net income $14,710 Earnings per share ($14,710 net income / 40,550 shares) $0.36 Single-step: 1. Simplicity and conciseness. 4. Does not imply priority of one revenue or expense over another. Multiple-step: Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse E4-4 (Multiple-Step and Single-Step) Two accountants for the firm of Allen 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 2012 information related to Webster Company ($000 omitted). (a) Prepare an income statement for the year 2012 using the multiple-step form. Common shares (b) Prepare an income statement for the year 2012 using the single-step form. Common shares (c) Which one do you prefer? Discuss. 2. Probably better understood by users. 3. Emphasis on total costs and expenses and net income. 1. Provides more information through segregation of operating and non-operating items. 2. Expenses are matched with related revenue. Note to instructor: Students’ answers will vary due to the nature of the question; i.e., it asks for an opinion. However, the discussion supporting the answer should include the above points.
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987b4adf2e74f9aa851952442c0257ad6d48389e.xlsx, E4-4, Page 2 of 8, 03/29/2012, 01:32:14 Name: Date: Instructor: Course: Administrative expenses Officers' salaries $4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 63,570 Rent revenue 17,230 Selling expenses Transportation-out 2,690 Sales commissions 7,980 Depreciation of sales equipment 6,480 Sales 96,500 Income tax 7,580 Interest expense 1,860 Instructions: outstanding for 2012 total 40,550 (000 omitted).
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ch04_sol - Name Solution Date Instructor Course...

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