The following selected accounts from the Blue Door Corporation's general ledger are presented below for the year ended December 31, 2015:

Advertising expense ............................ $ 55,000

Common shares .................................. 250,000

Cost of goods sold ............................ 1,085,000

Depreciation expense ........................... 125,000

Dividends ........................................ 150,000

Freight out ......................................... 25,000

Income tax expense .............................. 70,000

Insurance expense ................................ 15,000

Interest expense .................................. 70,000

Interest revenue .................................. 30,000

Merchandise inventory .......................... 67,000

Rent revenue ...................................... 24,000

Retained earnings ............................... 535,000

Salaries expense ................................. 675,000

Sales ............................................ 2,400,000

Sales discounts ..................................... 8,500

Sales returns and allowances .................... 41,000

Unearned revenue ................................. 8,000

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.