Question

The following incorrect income statement was prepared by the accountant of the Axel Corporation:

AXEL CORPORATION Income Statement For the Year Ended December 31, 2021
Revenues and gains:
Sales revenue				$	760,000
Interest revenue					49,000
Gain on sale of investments					96,000
Total revenues and gains					905,000
Expenses and losses:
Cost of goods sold	$	410,000
Selling expense		76,000
Administrative expense		96,000
Interest expense		33,000
Restructuring costs		72,000
Income tax expense		54,500
Total expenses and losses					741,500
Net Income				$	163,500
Earnings per share				$	1.64

Required:
Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)
  

Answer 1

Answer
PREPARE MULTISTEP INCOME STATEMENT :
Sales		$     760,000
Less: Cost of goods sold		-$     410,000
Gross profit		$     350,000
Less: Operating expenses
Selling expenses	-$     76,000
Administrative expenses	-$     96,000
Restructuring costs	-$     72,000	-$     244,000
Income from operation		$     106,000
OTHER EXPENSES
Interest expenses	-$     33,000
OTHER REVENUE
Interest & dividend	$     49,000
Gain on sale of investment	$     96,000	$     112,000
Income before taxes		$     218,000
Less: Income tax @25%		-$       54,500
Net income		$     163,500
Share outstanding (163500/1.64)		$       99,695
EPS   (163500/99695)		$           1.64
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