P4-48B. (Learning Objectives 2, 4: Aggregating information for presentation on the Income Statement) Ruperts Home Repair Services had the following balances at the end of 20X4 and 20X5.

		20X5	20X4
2	Sales revenue	$ 39,800	$ 42,900
3	Service revenue	11,300	27,700
4	Interest income	2,300	3,900
5	Cost of goods sold	13,200	17,400
6	Wages and salaries	10,300	12,200
7	Depreciation	2,900	2,900
8	Supplies expense	7,800	8,400
9	Interest expense	400	600
10	Motor vehicle expense	3,500	4,100
11	Fuel expense	1,600	2,400
12	Utilities expense	2,100	1,500
13	Advertising expense	2,700	3,200
14	Tax expense	1,400	2,000
15

Requirements

1- Assuming that Rupert would like to disclose no more than what is required by accounting standards, with the maximum level of aggregation possible, prepare an multi step Income Statement to such that

Service

Revenues

minus

Operating Expenses

equals Step 1: Income from Operations

plus or minus

Other Revenues and Expenses

equals

Step 2: Inc. Bef. Income Taxes

minus

Income Taxes

equals

Step 3: Net Income

Merchandising

Net Sales

minus

Cost of Goods Sold

equals

Step 1: Gross Margin

minus

Operating Expenses

equals

Step 2: Income from Operations

plus or minus

Other Revenues and Expenses

equals

Step 3: Inc. Before Income Taxes

minus

Income Taxes

equals

Step 4: Net Income

.

2- Why would it not be possible for Rupert to simply show a three-line Income Statement, one that simply lists total revenue, total expenses, and net profit?