Question

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.

Answer 1

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