Refer to the list of income statement items in Problem 2-6. Assume that Shaw Corporation classifies all operating expenses into two categories: (1) setting and (2) general and administrative.

Required:

1. Prepare a multiple-step income statement for the current year.

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?

Reference: Problem 2-6:

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

Transcribed Image Text:

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

Answer rating: 100% (QA)

Multi step income statement In this case every income and gains and expenses are classified into sub... View the full answer