Exercise: "W3-1, Multiple-step and Single-step Income
Statements (Chapter 4)"
The following information has been complied from the records of Faith Hill Company as a basis for an income statement for the year ended December 31, 2008.
Rental revenue $36,000
Interest on notes payable 15,000
Market appreciation on land above cost 31,000
Wages and salaries - sales 111,300
Materials and supplies - sales 15,300
Income tax 35,700
Wages and salaries - administrative 127,600
Other administrative expenses 48,700
Cost of goods sold 423,000
Net sales 875,000
Depreciation on plant assets (70% selling, 30% administrative) 65,000
Cash dividends declared 16,000
Instructions:
(a) Prepare an income statement for the year 2008 using the multiple-step form. Common shares
Outstanding for 2008 total 20,000
FAITH HILL COMPANY
Multi-Step Income Statement
For the Year Ended December 31, 2008
Title Amount
Title Amount
Title Formula
Operating Expenses
Title
Account Title Amount
Account Title Amount
Account Title Amount Formula
Title
Account Title Amount
Account Title Amount
Account Title Amount Formula Formula
Title Formula
Other Revenues and Gains
Account Title Amount
Formula
Other Expenses and Losses
Account Title Amount
Income before taxes Formula
Account Title Amount
Net income Formula
Earnings per share Formula
(b) Prepare an income statement for the year 2008 using the single-step form. Common shares
Outstanding for 2008 total 20,000 (000 omitted).
FAITH HILL COMPANY
Single-Step Income Statement
For the Year Ended December 31, 2008
Revenues
Net sales Amount
Title Amount
Total revenues Formula
Expenses
Title Amount
Title Amount
Title Amount
Title Amount
Total expenses Formula
Income before taxes Formula
Title Amount
Net income Formula
Earnings per share Formula
(c) Which one do you prefer? Discuss.
Single-step:
Multiple-step:
