Question

The preliminary 2021 income statement of Alexian Systems, Inc., is presented below:

ALEXIAN SYSTEMS, INC. Income Statement For the Year Ended December 31, 2021 ($ in millions, except earnings per share)
Revenues and gains:
Sales revenue	$	440
Interest revenue		9
Other income		131
Total revenues and gains		580
Expenses:
Cost of goods sold		250
Selling and administrative expense		154
Income tax expense		44
Total expenses		448
Net Income	$	132
Earnings per share	$	13.20

Additional information:

1. Selling and administrative expense includes $31 million in restructuring costs.
2. Included in other income is $125 million in income from a discontinued operation. This consists of $90 million in operating income and a $35 million gain on disposal. The remaining $6 million is from the gain on sale of investments.
3. Cost of goods sold was increased by $10 million to correct an error in the calculation of 2020’s ending inventory. The amount is material.

Required:
Prepare a revised income statement for 2021 reflecting the additional facts. Use a multiple-step format. Assume that an income tax rate of 25% applies to all income statement items, and that 10 million shares of common stock were outstanding throughout the year. (Enter your answers in millions rounded to 2 decimal places. Round EPS answers to 2 decimal places.)
  

Answer 1

ALEXIAN SYSTEMS, INC
Multi Step Income statement - $ in Million
	Amount	Amount
Sales		$440.00
Less: Cost Of Goods Sold (250-10)		$240.00
Gross Profit		$200.00
Operating Expenses
Selling And Administrative Expenses(154-31)	$123.00
Restructuring Cost	$31.00
Less: Total Operaing Expenses		$154.00
Operating Income		$46.00
Other Income:
Interest Revenue	$9.00
Gain On Sale Of Investment	$6.00
Total Other Income		$15.00
Income From Continuing Operations Before Tax		$61.00
Less: Income Taxes@ 25%		$15.25.00
Income From Continuing Operations		$45.75
Discontinued Operations
Income From Operations Of Discontinued Component	$125.00
Less: Income Tax Expenses @25%	$31.25
Income On Discontinued Operations		$93.75
Net Income		$139.5
Earnings Per Share
Income From Continuing Operations (45.75/10)		$4.58
Discontinued Operations (93.75/10)		$9.37
Net Income (139.5/10)		$13.95

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