On August 31, 2008, the balances of the accounts appearing in the ledger of The Bent Needle Company, a furniture wholesaler, area follow:

Administrative Expenses $125,000

Building 512,500

Cash 48,500

Cost of Merchandise Sold 700,000

Interest Expense 7,500

Capital Stock 568,580

Dividends 25,000

Merchandise Inventory 130,000

Notes Payable 25,000

Office Supplies 10,600

Salaries Payable 3,220

Sales 1,275,000

Sales Discounts 20,000

Sales Returns and Allowances 80,000

Selling Expenses 205,000

Store Supplies 7,700

1. Prepare a multiple-step income statement for the year ended August 31, 2008.

2. Compare the major advantages and disadvantages of the multiple-step and single-step form of income statements.