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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 5-5

Purpose: (L.O. 5) This exercise will allow you to practice preparing an income statement and to contrast the multiple-step format and the single-step format for this statement.

The accountant for Steve Bradley Golf Products, Inc. has compiled the following information from the company's records as a basis for an income statement for the year ended December 31, 2014.

Rental revenue $ 29,000
Interest expense 18,000
Salaries and wages 151,700
Supplies 10,000
Sales 970,000
Freight-out 7,600
Advertising expense 15,800
Depreciation on store equipment 65,000
Sales returns and allowances 9,000
Rent expense 154,900
Cost of goods sold 446,000
Dividends 40,000

Instructions

(a) Prepare a multiple-step income statement.

(b) Prepare a single-step income statement.

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