Question

Earnings per Share and Multiple-Step Income Statement
The following summarized data relate to Bowden Corporation’s current operations:

Sales revenue	$745,000
Cost of goods sold	450,000
Selling expenses	58,000
Administrative expenses	72,000
Loss on sale of equipment	5,000
Income tax expense	64,000
Shares of common stock
Outstanding at January 1	15,000	shares
Additional issued at May 1	7,000	shares
Additional issued at November 1	2,000	shares

Required
Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement.

Do not use negative signs with any of your answers below.

BOWDEN CORPORATION Income Statement For the Year Ended December 31
Sales Revenue		Answer
Cost of Goods Sold		Answer
Gross Profit on Sales		Answer
Selling Expenses	Answer
Administrative Expenses	Answer	Answer
Operating Income		Answer
Loss on Sale of Equipment		Answer
Income before Taxes		Answer
Income Tax Expense		Answer
Net Income		Answer
Earnings per share of Common Stock		Answer

Answer 1

WORKING NOTES:
	CALCULATION OF THE WEIGHTED AVERAGE SHARES OUTSTANDING
	Total Shares Outstanding at Beginning	5,000	Shares
	Additional Shares issued as on May 1 = 7,000 Shares X 8 / 12 Monts	11,000	Shares
	Additional Shares issued as at Nov = 12,000 Shares X 2 / 12 Monts	5,667	Shares
	Total Weighted Average Shares outstanding	21,667	Shares
SOLUTION:
	MULTI STEP INCOME STATEMENT
		Amount	Amount
	Revenue
	Sales Revenue		$         7,45,000
	Less: Cost of Goods Sold		$         4,50,000
	Gross Profit		$         2,95,000
	Less: Operating Expenses
	Selling expenses	$              58,000
	Administrative Expenses	$              72,000
	Total Operating Expenses		$         1,30,000
	Operating Income		$         1,65,000
	Non-Operating and others
	Loss on sale of Equipment	$               -5,000
			$             -5,000
	Net Income		$         1,60,000
	Less: Income tax Expenses		$             64,000
	Net income after Taxes		$             96,000
	Divide By		"/" By
	Weighted Average Shares Outstanding		21,667
	Earning Per Shares		$                 4.43