Question

In: Accounting

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:

a.  

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

b.  

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

c.  

Determine Egeland's gross margin percentage for the year.

d.  

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 2 years ago
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