Income statement information for Flett Tire Repair Corporation for the year 2020 follows:

The effective tax rate on all income is 25%, and Flett follows ASPE.

Instructions

a. Prepare a multiple-step income statement for 2020, showing expenses by function.

b. Prepare a single-step income statement for 2020, showing expenses by nature.

c. Discuss the merits of the two income statements, compared with each other.

Transcribed Image Text:

General and administrative expenses: Salaries and wages expense Depreciation expense-building Office supplies expense Inventory (ending) Loss from flood damage Gain on the disposal of equipment Purchases Sales revenue Interest expense Freight in Purchase discounts Dividend revenue Inventory (beginning) Sales returns and allowances Service expenses: $ 14,000 $ 39,000 28,500 9,500 10,000 20,000 120,000 15,000 137,000 50,000 Salaries and wages Depreciation expense- garage equipment Garage supplies expense 71,000 600,000 930,000 9,000 18,000 9,000