Answer:
<u>Part a</u>
Blossom Company
Income statement for the year 2014 - multiple-step form
$000
Sales revenue 97,088
Less Cost of goods sold (61,158)
Gross Profit 35,930
Less Operating Expenses :
<u>Administrative expense</u>
Officers' salaries 5,488
Depreciation of office furniture and equipment 4,548 (10,036)
<u>Selling expense :</u>
Delivery expense 3,278
Sales commissions 8,568
Depreciation of sales equipment 7,068 (18,914)
Operating Income (Loss) 6,980
Less Non Operating Expenses :
Income tax 9,658
Interest expense 2,448 (12,106)
Net Income (Loss) (5,126)
<u>Part b</u>
Blossom Company
Income statement for the year 2014 - single-step form
$000
Sales revenue 97,088
Less Cost of goods sold (61,158)
Gross Profit 35,930
Less Expenses :
Officers' salaries 5,488
Depreciation of office furniture and equipment 4,548
Delivery expense 3,278
Sales commissions 8,568
Depreciation of sales equipment 7,068
Income tax 9,658
Interest expense 2,448 (41,056)
Net Income (Loss) (5,126)
Explanation:
The multiple-step form shows the Operating Income and Net Income separately by grouping expenses as either operating and non-operating expenses.
The single-step form shows all expenses under one category and no grouping of expenses as either operating or non-operating.
