Question

he following information is available for Sage Hill, Inc. for the year 2017.

Administrative expense
Officers' salaries		$11,000
Depreciation of office furniture and equipment		8,400
Cost of goods sold		121,520
Rent revenue		2,500
Selling expense
Delivery expense		4,400
Sales commissions		16,970
Depreciation of sales equipment		13,200
Sales revenue		231,000
Income tax		12,370
Interest expense		3,460

Common shares outstanding for 2017 total 23,000 (000 omitted).

Prepare an income statement for Sage Hill Inc. for the year 2017 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Solution:

Sage Hill Inc.
Multi Step Income statement
For the year 2017
Particulars		Amount
Revenues:
Sales revenue		$231,000.00
Cost of goods sold		$121,520.00
Gross Profit		$109,480.00
Selling Expenses:
Delivery Expense	$4,400.00
Sales commissions	$16,970.00
Depreciation on sales equipment	$13,200.00
Total Selling expenses		$34,570.00
Administrative expenses:
Officer's salaries	$11,000.00
Depreciation of office furniture and equipment	$8,400.00
Total administrative expenses		$19,400.00
Operating income		$55,510.00
Add: Rent revenue		$2,500.00
Earning before interest and Taxes		$58,010.00
Less: Interest expense		$3,460.00
Income before taxes		$54,550.00
Income tax expense		$12,370.00
Net Income (Loss)		$42,180.00
Earning per share ($42,180 / 23000)		$1.83