### EX 5-23 Multiple-step Income Statement#### Educational Exercise:On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows:| Account Description | Amount ($) | Account Description | Amount ($) ||--------------------------------------------|-----------------|-----------------------|-------------|| Accumulated Depreciation—Building | 750,000 | Merchandise Inventory | 980,000 || Administrative Expenses | 540,000 | Notes Payable | 250,000 || Building | 2,500,000 | Office Supplies | 20,000 || Cash | 175,000 | Retained Earnings | 1,287,000 || Common Stock | 300,000 | Salaries Payable | 8,000 || Cost of Merchandise Sold | 3,800,000 | Sales | 6,410,000 || Dividends | 175,000 | Selling Expenses | 715,000 || Interest Expense | 10,000 | Store Supplies | 90,000 |**Tasks:**1. **Prepare a multiple-step income statement for the year ended October 31, 2016.**2. **Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.**#### Detailed Explanation:- **Accumulated Depreciation—Building:** Represents the total amount of depreciation expense that has been recorded against the company's buildings.- **Administrative Expenses:** General costs associated with running the company.- **Building:** The value of the company's buildings.- **Cash:** The company's available cash balance.- **Common Stock:** Equity capital raised by issuing shares of the company.- **Cost of Merchandise Sold:** The direct costs attributable to the goods sold by the company.- **Dividends:** Distribution of a portion of the company's earnings to shareholders.- **Interest Expense:** Cost incurred by the company for borrowed funds.- **Merchandise Inventory:** The value of goods available for sale.- **Notes Payable:** Amounts the company owes to lenders or creditors.- **Office Supplies:** The value of office supplies on hand.- **Retained Earnings:** Cumulative net earnings retained in the company rather than paid

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Description: ### EX 5-23 Multiple-step Income Statement#### Educational Exercise:On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows:| Account Description

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EX 5-23 Multiple-step income statement On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows: $ 980,000 $ 750,000 Merchandise Inventory Accumulated Depreciation-Building Administrative Expenses Notes Payable Office Supplies 250,000 20,000 540,000 2,500,000 Building Cash 1,287,000 8,000 175,000 Retained Earnings Common Stock 300,000 Salaries Payable 6,410,000 715,000 90,000 Cost of Merchandise Sold 3,800,000 Sales Dividends 175,000 Selling Expenses Store Supplies Interest Expense 10,000 Prepare a multiple-step income statement for the year ended October 31, 2016. Compare the major advantages and disadvantages of the multiple-step and ingle-step forms of income statements.

EX 5-23 Multiple-step income statement On October 31, 2016, the balances of the accounts appearing in the ledger of Prestige Furnishings Company, a furniture wholesaler, are as follows: $ 980,000 $ 750,000 Merchandise Inventory Accumulated Depreciation-Building Administrative Expenses Notes Payable Office Supplies 250,000 20,000 540,000 2,500,000 Building Cash 1,287,000 8,000 175,000 Retained Earnings Common Stock 300,000 Salaries Payable 6,410,000 715,000 90,000 Cost of Merchandise Sold 3,800,000 Sales Dividends 175,000 Selling Expenses Store Supplies Interest Expense 10,000 Prepare a multiple-step income statement for the year ended October 31, 2016. Compare the major advantages and disadvantages of the multiple-step and ingle-step forms of income statements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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