Refer to the list of income statement items in Problem 2-6. Assume that Shaw Corporation classifies all operating expenses into two categories:

(1) Selling and

(2) General and administrative.

Required

1. Prepare a multiple-step income statement for the year ended December 31, 2012.

2. What advantages do you see in this form for the income statement?

3. Compute Shaw's profit margin.

4. Comment on Shaw's profitability. What other factors need to be taken into account to assess Shaw's profitability?

Data From Problem 2-6

The following income statement items, arranged in alphabetical order, are taken from the records of Shaw Corporation for the year ended December 31, 2012:

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$ 1,500 Interest expense $ 1,400 1,340 Advertising expense Commissions expense Cost of goods sold Depreciation expense-office building |Income tax expense Insurance expense– 2,415 Interest revenue 29,200 Rent revenue 6,700 Salaries and wages expense-office Sales revenue 2,900 12,560 1,540 48,300 Supplies expense-office 890 salesperson's auto 2,250