In: Accounting
Multiple-step income statement.
Shown below is revenue, expense, gain, and loss information for AAA Corporation for 2019.
Administrative expense 215,000
Cost of merchandise sold 408,500
Interest expense 13,000
Dividend revenue 19,500
Pre-tax loss on disposal of a component of the business 30,000
Loss from write-down of inventory 70,000
Sales revenue 945,000
Selling expenses 145,000
Instructions
Prepare a multiple-step income statement, in proper form for 2019 for AAA Corporation that is presented in accordance with generally accepted accounting principles (including format and terminology). AAA Corporation has 75,000 shares of common stock outstanding and has a 20% federal income tax rate on all tax related items. Round all earnings per share figures to the nearest cent.
Multiple-step income statement | ||
Amount $ | ||
Sales Revenue | 945,000 | |
Less: Cost of Merchandise Sold | -408,500 | |
Gross Profit | 536,500 | |
Less: Operating Expenses | ||
Administrative Expense | -215,000 | |
Selling Expense | -145,000 | |
Operating Income | 176,500 | |
Non-operating Income & Expenses | ||
Dividend Revenue | 19,500 | |
Interest Expense | -13,000 | |
Loss from write-down of inventory | -70,000 | |
Earnings before Tax from Continuing operations | 113,000 | |
Less: Federal Income Tax @20% | -22,600 | |
Earnings after Tax from Continuing operations-A | 90,400 | |
Discontinuing Operations | ||
Pre-tax loss on disposal of a component of the business | -30,000 | |
Add: Tax Saving | 6,000 | |
Loss from Discontinuing operations net of Tax savings-B | -24,000 | |
Net income ( 90,400 - 24,000 ) | 66,400 | |
Earnings per shares | ||
Earnings after Tax from Continuing operations | $ 1.21 | =90400/75000 |
Loss from Discontinuing operations net of Tax savings | - $ 0.32 | =-24000/75000 |
Net Income | $ 0.89 | =66400/75000 |