The following selected accounts from the Blue Door Corporation's general ledger are presented below for the year ended December 31, 2018:
Accounts receivable ..........................................................$ 265,000
Accumulated depreciation-equipment...............................783,500
Advertising expense...............................................................55,000
Common shares....................................................................250,000
Cost of goods sold............................................................1,172,000
Depreciation expense...........................................................125,000
Dividends declared..............................................................150,000
Equipment.........................................................................1,450,000
Freight out..............................................................................25,000
Income tax expense................................................................70,000
Insurance expense..................................................................23,000
Interest expense.....................................................................62,000
Interest revenue......................................................................30,000
Inventory................................................................................97,000
Prepaid expenses....................................................................31,000
Rent revenue..........................................................................24,000
Retained earnings.................................................................535,000
Salaries expense....................................................................705,000
Sales...................................................................................2,650,000
Sales discounts........................................................................19,500
Sales returns and allowances...................................................41,000
Unearned revenue...................................................................18,000
Instructions
(a) Prepare a single-step income statement.
(b) Prepare a multiple-step income statement.
(c) Are the expenses classified by nature or function in the list of accounts above? Explain.