Preparing a Single-Step and a Multiple-Step Income Statement
b. Prepare a multiple-step income statement (including earnings per share). Note: Use a negative sign only for an expense or loss item included in the section "Other Revenues (Expenses)". Note: Enter the answer for earnings per share in dollars and cents, rounded to the nearest penny.
The following selected items are taken from the accounting records of Amick Corp. at December 31:
Sales revenue: $950,000
Cost of goods sold: $575,000
Dividends received on investment in stocks: $6,500
Interest expense: $4,200
Loss on sale of investments: $48,000
Promotion expense: $15,000
Shipping expense: $25,000
Depreciation (50% selling, 50% general and administrative): $20,000
Salaries (general and administrative): $90,000
Other general and administrative expenses: $23,000
Salaries (selling): $85,300
Interest revenue: $2,500
Income tax rate: 25%
Number of common stock shares: 20,000
Gross profit: $375,000
Cost of goods sold: $575,000
Operating expenses:
Selling expenses: $85,300
General and administrative expenses: $23,000
Depreciation expense: $20,000
Sales revenue: $950,000
Other revenues (expenses): $0
a. Prepare a single-step income statement (including earnings per share). Include income taxes in its own section. Note: Use a negative sign only for an expense or loss item included in the section "Other Revenues (Expenses)". Note: Enter the answer for earnings per share in dollars and cents, rounded to the nearest penny.
Revenues and gains:
Sales revenue: $950,000
Interest revenue: $2,500
Total revenues and gains: $952,500
Expenses and losses:
Cost of goods sold: $575,000
Salaries expense (selling): $85,300
Loss on sale of investments: $48,000
Shipping expense: $25,000
Other general and administrative expenses: $23,000
Depreciation expense: $20,000
Interest expense: $4,200
Total expenses and losses: $780,500
Earnings before income taxes: $172,000
Income tax expense: $43,000
Net earnings: $129,000
Earnings per share: $6.45