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The following is a partial trial balance for General Lighting Corporation as of December 31, 2021:...

The following is a partial trial balance for General Lighting Corporation as of December 31, 2021:

Account Title Debits Credits
Sales revenue 3,000,000
Interest revenue 93,000
Loss on sale of investments 29,000
Cost of goods sold 1,320,000
Loss on inventory write-down (obsolescence) 330,000
Selling expense 430,000
General and administrative expense 215,000
Interest expense 92,000


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:

  1. Prepare a single-step income statement for 2021, including EPS disclosures.

  2. Prepare a multiple-step income statement for 2021, including EPS disclosures.

Solutions

Expert Solution

Single - Step Income Statement:
General lighting corporation
Income Statement
For the year ended December 31, 2021
Revenues
Sales revenue $ 30,00,000
Interest revenue $       93,000
Total Revenue $ 30,93,000
Expenses:
Cost of goods sold $ 13,20,000
Selling Expenses $   4,30,000
General and Administrative expenses $   2,15,000
Interest expense $       92,000
Loss on sale of Investment $       29,000
Loss due to written down of inventory $   3,30,000
Total Expenses $ 24,16,000
Income before income tax $   6,77,000
Income tax @25% $   1,69,250
Net Income $   5,07,750
Earnings per share ($507750 / 300000 shares) $            1.69
Multiple - Step Income Statement:
General lighting corporation
Income Statement
For the year ended December 31, 2021
Revenues
Sales revenue $ 30,00,000
Cost of goods sold $ 13,20,000
Gross profit on sales $ 16,80,000
Operating Expenses:
Selling Expenses $   4,30,000
General and Administrative expenses $   2,15,000
Loss due to written down of inventory $   3,30,000
Total operating expense $   9,75,000
Income from operations $   7,05,000
Other Revenues and expenses
Interest revenue $       93,000
Interest expense $     -92,000
Loss on sale of Investment $     -29,000
Net other income $     -28,000
Income before income tax $   6,77,000
Income tax @25% $   1,69,250
Net Income $   5,07,750
Earnings per share ($507750 / 300000 shares) $            1.69

ekkarill92 answered 3 weeks ago
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