Question

Question 2 of 6 -/2 View Policies Current Attempt in Progress Two accountants for the form 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 Vaughn Company ($000 omitted). $5,039 4,099 60,709 17,369 Administrative expense Officers' salaries Depreciation of office furniture and equipment Cost of goods sold Rent revenue Selling expense Delivery expense Sales commissions Depreciation of sales equipment Sales revenue Income tax Interest expense 2.829 8,119 6,619 96.639 9.209 1.999 Common shares outstanding for 2020 total 38,465 (000 omitted). (a) in the multiple step form. (Round earnings per share to 2 decimal placese.

Answer 1

Solution:

Below is the Income statement for the year 2020 using multi step form.

Working 96,639 60,709 35,930 (96,639- 60,709) VAUGHN COMPANY Income Statement For the Yaer ending Decemeber 31, 2020 (In thousands, Except Earning per Share) Sales Revenue Cost of goods sold Gross profit/ (Loss) Operating expenses: Selling expenses: Delivery expense 2,829 Sales commission 8,119 Depreciation expense of sales equipment 6.619 Total selling expenses Administrative expenses: Salaries & Wages expense 5,039 Depreciation of office furniture and equipment 4,099 Total administrative expenses 17,567 (2,829 + 8,119 +6,619) 9,138 (5,039 +4,099) 26,705 (17,567 +9,138) 9,225 (35,930 - 26,705) Income from operations Other revenues and gains Rent revenue 17,369 26,594 (9,225 + 17,369) Other expenses and losses Interest expense Income before income tax Income tax expense Net income / (Loss) Earning Per share 1.999 24,595 (26,594 - 1,999) 9.209 15,386 (24,595 - 9,209) 0.40 (15,386 / 38,465)