Question

he following is a partial trial balance for General Lighting Corporation as of December 31, 2016:

Account Title	Debits			Credits
Sales revenue					2,550,000
Interest revenue					84,000
Loss on sale of investments		24,500
Cost of goods sold		1,230,000
Loss from write-down of inventory due to obsolescence		240,000
Selling expenses		340,000
General and administrative expenses		170,000
Interest expense		83,000

300,000 shares of common stock were outstanding throughout 2016. Income tax expense has not yet been recorded. The income tax rate is 40%.

Required:
1.	Prepare a single-step income statement for 2016, including EPS disclosures. (Round EPS answers to 2 decimal places.)

      

2.	Prepare a multiple-step income statement for 2016, including EPS disclosures. (Round EPS answers to 2 decimal places.)

      

Answer 1

1.

General Lighting Corporation
Income Statement
For the year ended 31 December, 2016
Revenues and Gains
Sales Revenue		$ 2,550,000
Interest Revenue		$        84,000
Total Revenues and Gains		$ 2,634,000
Expenses and Losses
Loss on sale of investment	$        24,500
Cost of goods sold	$ 1,230,000
Loss from write down of inventory	$     240,000
Selling expenses	$     340,000
General and administrative expenses	$     170,000
Interest expense	$        83,000
Total expenses and losses		$ 2,087,500
Income before income tax		$     546,500
Income tax expense ($546,500*40%)		$     218,600
Net Income		$     327,900
Earnings per share
Net Income ($327,900/300,000)		$            1.09

2.

General Lighting Corporation
Income Statement
For the year ended 31 December, 2016
Sales revenue		$ 2,550,000
cost of goods sold		$ 1,230,000
gross profit		$ 1,320,000
Operating expenses
Loss from write down of inventory	$ 240,000
selling expenses	$ 340,000
general and administrative expense	$ 170,000
Total operating expense		$     750,000
operating income		$     570,000
Other income (Expenses)
Interest revenue	$    84,000
Loss on sale of investments	$ (24,500)
Interest expenses	$ (83,000)
Total other income (Expenses)		$     (23,500)
Income before taxes		$     546,500
Income tax expense ($546,500*40%)		$     218,600
Net income		$     327,900
Earning per share
Net income ($327,900/300,000)		$            1.09

You can reach me over comment box if you have any doubts. Please rate this answer