The following selected accounts from the Blue Door Corporation's general ledger are presented below for the year ended December 31, 2012:

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.

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Interest revenue Merchandise inventory Rent revenue Retained earnings Salaries expense Advertising expense Cost of goods sold Depreciation expense 2 2,400,000 Freight out Income tax expense Insurance expense Interest expense Sales discounts Sales returns and allowances Unearned revenue 8