Question

The following is a partial trial balance for General Lighting Corporation as of December 31, 2021: Account Title Debits Credits Sales revenue 3,100,000 Interest revenue 95,000 Loss on sale of investments 30,000 Cost of goods sold 1,340,000 Loss on inventory write-down (obsolescence) 350,000 Selling expense 450,000 General and administrative expense 225,000 Interest expense 94,000 There were 300,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%. Required: Prepare a single-step income statement for 2021, including EPS disclosures. Prepare a multiple-step income statement for 2021, including EPS disclosures.

Answer 1

Single-step income statement for 2021

General Lighting Corporation
Single Step Income statement
For the Year Ended December 31, 2021
Revenue
Sales Revenue	$ 3,100,000
Interest Revenue	$        95,000
Total Revenue (A)		$     3,195,000
Operating Expenses / Expenses
Cost of goods sold	$ 1,340,000
selling expense	$     450,000
Administrative expense	$     225,000
Interest Expense	$        94,000
Loss onsale of investments	$        30,000
Write-down of inventory due to obsolescence	$     350,000
Total Expenses (B)		$     2,489,000
Net Income before tax (A-B)		$         706,000
(less): income tax [706000*25%]		$       (176,500)
Net Income		$         529,500
Earnings Per Share [ 529500/300000]		$                1.77

Multiple-step income statement for 2021:

General Lighting Corporation
Multiple Step Income statement
For the Year Ended December 31, 2021
Sales Revenue
Net Sales		$   3,100,000
Less: Cost of good sold		$ (1,340,000)
Gross Profit		$   1,760,000
Operating expenses:
Selling expenses	$ 450,000
Administrative expenses	$ 225,000
Total operating expenses		$    (675,000)
Operating Income ( Gross profit - Operating Expense)		$   1,085,000
Other revenue
Interest Revenue	$    95,000	$         95,000
		$   1,180,000
Other Expense and losses
Loss on sale of investments		$       (30,000)
Write-down of inventory due to obsolescence		$    (350,000)
Interest Expense		$       (94,000)
Income before taxes		$       706,000
(less): income tax [706000*25%]		$    (176,500)
Net Income		$       529,500
Earnings Per Share [ 529500/300000]		$              1.77