(Multiple-step and Single-step) The accountant of Whitney Houston Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2004.

Rental revenue                                                                                         $ 29,000

Interest on notes payable                                                                         18,000

Market appreciation on land above cost                                                31,000

Wages and salaries—sales                                                                      114,800

Materials and supplies—sales                                                             `   17,600

Income tax                                                                                                   37,400

Wages and salaries—administrative                                                     135,900

Other administrative expenses                                                                51,700

Cost of goods sold                                                                                    496,000

Net sales                                                                                                    980,000

Depreciation on plant assets (70% selling, 30% administrative)        65,000

Dividends declared                                                                                    16,000

There were 20,000 shares of common stock outstanding during the year.

Instructions

(a) Prepare a multiple-step income statement.

(b) Prepare a single-step income statement.

(c) Which format do you prefer? Discuss.