On December 31, 2012, the balances of the accounts appearing in the ledger of Warm Place Furnishings Company, a furniture wholesaler, are as follows:

a. Prepare a multiple-step income statement for the year ended December 31, 2012.
b. Compare the major advantages and disadvantages of the multiple-step and single-step forms of incomestatements.

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Administrative Expenses Building Cash Cost of Merchandise Sold Interest Expense Merchandise Inventory Notes Payable Office Supplies 250,000 Rhonda Sipes, Capital 1,025,000 741,000 50,000 6,000 3,000,000 40,000 160,000 450,000 65,000 Rhonda Sipes, Drawing 97,000 Salaries Payable 1,700,000 Sales 30,000 260,000 Sales Discounts Sales Returns and Allowances 400,000 Selling Expenses 20,000 Store Supplies