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Exercise 4-5 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 2017 information related to P. Bride Company ($000 omitted). Administrative expense $4,900 3,960 60,570 17,230 Officers salaries Depreclation of office furniture and equipment Cost of goods sold Rent revenue Selling expense 2,690 7,980 6,480 96,500 9,070 1,860 Delivery expense Sales commissions Depreciation of sales equipment Sales revenue Income tax Interest expense Common shares outstanding for 2017 total 40,550 (000 omitted). 1.45 P. BRIDE COMPANY 1153 PM
Expert Answer
a)
| P. BRIDE COMPANY | ||||||
| Multi-Step Income Statement | ||||||
| For the Year Ended December 31, 2017 | ||||||
| (In thousands, except earnings per share) | ||||||
| Sales Revenue | $ 96,500 | |||||
| Cost of Goods Sold | $ 60,570 | |||||
| Gross Profit | $ 35,930 | |||||
| Operating Expenses | ||||||
| Selling Expenses | ||||||
| Delivery Expense | $ 2,690 | |||||
| Sales Commissions | $ 7,980 | |||||
| Depreciation of sales equipment | $ 6,480 | $ 17,150 | ||||
| Administrative/General Expenses | ||||||
| Officers’ Salaries | $ 4,900 | |||||
| Depreciation of office furniture and equipment | $ 3,960 | $ 8,860 | $ 26,010 | |||
| Income from Operations | $ 9,920 | |||||
| Other Revenues and Gains | ||||||
| Rent Revenue | $ 17,230 | |||||
| $ 27,150 | ||||||
| Other Expenses and Losses | ||||||
| Interest Expense | $ 1,860 | |||||
| Income before taxes | $ 25,290 | |||||
| Income tax | $ 9,070 | |||||
| Net income | $ 16,220 | |||||
| Earnings Per Share | $ 0.40 | |||||
b)
| P. BRIDE COMPANY | |||||
| Single-Step Income Statement | |||||
| For the Year Ended December 31, 2017 | |||||
| (In thousands, except earnings per share) | |||||
| Revenues | |||||
| Net sales | $ 96,500 | ||||
| Rent Revenue | $ 17,230 | ||||
| Total revenues | $ 113,730 | ||||
| Expenses | |||||
| Officers’ Salaries | $ 4,900 | ||||
| Depreciation | $ 10,440 | ||||
| Delivery/Interest Expense | $ 4,550 | ||||
| Sales Commissions | $ 7,980 | ||||
| Total expenses | $ 27,870 | ||||
| Income before taxes | $ 85,860 | ||||
| Income Tax | $ 9,070 | ||||
| Net income | $ 76,790 | ||||
| Earnings Per Share | $ 1.89 | ||||
