Question

Sally Corporation had the following account balances.  1) Please make an income statement using the multi- step approach with the information below. 2) Please calculate earnings per share as well.  

Cost of Goods Sold	$1,400,000
Selling Expense	$244,000
Interest Revenue	$42,000
Administrative Expenses	$322,000
Income Tax Rate	22%
Common Stock Outstanding	110,000
Interest Expense	$25,000
Unrealized Gain on value of Patent	$100,000
Sales	2,400,000

Question Two

Discontinued Operations

Account	Amount
Income from Continued Operations	$5,000,000
Loss from disposal of business segment net of taxes	$260,000
Loss on operations of business segment net of taxes	$340,000
Outstanding Common Stock Shares	200,000

Answer 1

Answer-1
Income statement using Multi Step Approach
Particulars	Amount in $
Sales	2,400,000.00
Less: Cost of goods sold	(1,400,000.00)
Gross profit	1,000,000.00
Less: Operating expenses
Selling expense	244,000.00
Administrative expense	322,000.00
Operating Income	434,000.00
Non-operating items;
Add: Interest revenue	42,000.00
Less: Interest expense	(25,000.00)
Add: Unrealized gain on value of patent	100,000.00
Net Income before tax	551,000.00
Tax expenses (551000*22%)	(121,220.00)
Net income	429,780.00
Earnings per share = Earnings attributable to equity shareholder’s / Common stock outstanding
= $429780/ 110000 shares= $3.907 per share
Answer-2
Particulars	Amount in $
Discontinued operations
Income from continued operations	5,000,000.00
Less: Loss from disposal of business segment net of tax	260,000.00
Less: Loss on operations of business segment net of tax	340,000.00
Net income	4,400,000.00
Earnings per share = Earnings attributable to equity shareholder’s / Common stock outstanding
4400000/200000 = $ 22 per share