Question

Prepare a multiple-step income statement for Simon Corporation for 2019 using the data provided , including EPS disclosures assuming 500,000 shares of common stock were outstanding for 2019. The income tax rate is 25%.

Sales revenue : $30,000,000

General and administrative expenses : 5,400,000

Deferred revenue: 50,000

Interest expense: 18,000

Selling expenses : 800,000

Interest revenue: 16,000

Cost of goods sold: 9,000,000

Dividend revenue: 8,000

Additional Information:

The company's fiscal year end is December 31st. Income tax expense has not been determined. The following events also occurred during 2019. All transactions are material in amount unless otherwise noted.

1 -A chemical explosion caused $36,000 in uninsured damages to one of Simon's warehouses. The explosion was considered to be an unusual event.

2 -In October 2019, Simon sold its Paint division that qualified as a component of an entity for $1,600,000. The division generated "before tax income" of $360,000 from operations, from the beginning of the year through the date of disposal, and the book value of the division's assets was $700,000.

3 -$60,000 in restructuring costs were incurred in connection with corporate down-sizing.

4 -It was discovered that depreciation expense for 2018 was understated by $10,000 due to a mathematical error.

5 -Inventory that had a cost of $10,000 had become obsolete. The inventory was sold as scrap for $6,000.

6 -Simon Corporation experienced a foreign currency translation adjustment loss of $12,000.

7 -Investments were sold during the year at a loss of $3,000.

8 -Simon also had unrealized gains of $64,000 for the year on investments.

Answer 1

For Simon Corporation 2019				Profit on sale of paint Division
Income Statement for the year ended 31st December 2019.				Particulars	Details	Amount ($)
Particulars	Details	Amount ($)		Sale Value		1,600,000.00
Sales revenue	30,000,000.00			Book Value of unit	700,000.00
Less: deferred revenue	50,000.00	29,950,000.00		Income during the period	360,000.00
Cost of goods sold		9,000,000.00		Total value of Unit		1,060,000.00
Gross Profit		20,950,000.00		Profit on sale		540,000.00
Less: Operating Expenses
Selling Expenses	800,000.00
General and administrative expenses	5,400,000.00
Depreciation expense understated	10,000.00
Total Operating Expenses		6,210,000.00
Operating Income		14,740,000.00
Other Revenues and Expenses
Interest Expense	(18,000.00)
Interest Revenue	16,000.00
Dividend Revenue	8,000.00
Warehouse damages	(36,000.00)
Profit on sale of paint Division	540,000.00
Restructuring Costs	(60,000.00)
Loss on sale of inventory (10000-6000)	(4,000.00)
Loss on sale of investment	(3,000.00)
Total Other Revenues and Expenses		443,000.00
Income before tax		15,183,000.00
Less: Income Tax Expense @ 25%		3,795,750.00
Net Income		11,387,250.00
No. of Shares		500,000.00
Earning Per share		22.77
Note: Unrealized income are not shown in Income statement so foreign currency translation adjustment and unreliazed gains on investement are not included in income statement.