The following information was taken from Egeland Ltd.'s adjusted trial balance as at July 31, 2016:...

The following information was taken from Egeland Ltd.'s adjusted trial balance as at July 31, 2016:

Sales revenue	$2,788,800
Interest expense	44,000
Cost of goods sold	1,556,000
Sales discounts	16,000
Depreciation expense	216,000
Distribution expenses	414,000
Administration expenses	279,000
Sales returns and allowances	64,000
Interest revenue	19,200
Income tax expense	44,000
Dividends declared—Common shares	30,000
Dividends declared—Preferred shares	15,000

Question:

Prepare a single-step statement of income for the year ended July 31, 2016.

Prepare a multi-step statement of income for the year ended July 31, 2016.

Determine Egeland's gross margin percentage for the year.

If Egeland had 80,000 common shares outstanding throughout the year, determine the company's basic earnings per share.

Solutions

Expert Solution

Prepare a single-step statement of income for the year ended July 31, 2016.

Egeland Ltd
Statement of Income
For the Year ended July 31, 2016
Revenue
Net sales•	$27,08,800
Interest revenue	19,200
Total revenue	27,28,000
Expenses
Interest expense	44,000
Cost of goods sold	15,56,000
Depreciation expense	2,16,000
Distribution expenses	4,14,000
Administration expenses	2,79,000
Income tax expense	44,000
Total expenses	25,53,000
Net income	1,75,000

Prepare a multi-step statement of income for the year ended July 31, 2016.

Statement of Income
For the Year ended July 31, 2016
Revenue Sales	$ 27,88,800.00
Sales returns and allowances	$ 64,000.00
Sales discounts	$ 16,000.00
Net Sales	$ 27,08,800.00
Cost of goods sold	$ 15,56,000.00
Gross profit	$ 11,52,800.00
Operating expenses
Distribution expenses	$ 4,14,000.00
Administration expenses	$ 2,79,000.00
Depreciation expense	$ 2,16,000.00
Total operating expenses	$ 9,09,000.00
Profit from operations	$ 2,43,800.00
Other revenue and expenses
Interest revenue	$ 19,200.00
Interest expense	$ -44,000.00
Profit before income tax	$ 2,19,000.00
Income tax expense	$ 44,000.00
Net income	$ 1,75,000.00

Determine Egeland's gross margin percentage for the year.

=Gross Profit /Net sales

=1152800/2708800

=42.6%

determine the company's basic earnings per share.

basic earnings per share =Net Income/Shares Outstanding

=(175000-15000)/80000

=$2 per Share

ekkarill92 answered 1 year ago

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