Question

In: Accounting

The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION...

The following incorrect income statement was prepared by the accountant of the Axel Corporation:

AXEL CORPORATION
Income Statement
For the Year Ended December 31, 2018
Revenues and gains:
Sales $ 650,000
Interest and dividends 38,000
Gain on sale of investments 85,000
Total revenues and gains 773,000
Expenses and losses:
Cost of goods sold $ 355,000
Selling expenses 65,000
Administrative expenses 85,000
Interest 32,000
Restructuring costs 61,000
Income taxes 70,000
Total expenses and losses 668,000
Net Income $ 105,000
Earnings per share $ 1.05


Required:
Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%.

Solutions

Expert Solution

  • As asked, Multi Step Income Statement is provided from available data:

AXEL CORPORATION

Income Statement

For the Year Ended December 31, 2018

A

Sales Revenue

$               6,50,000.00

B

Cost of goods sold

$               3,55,000.00

C=A-B

Gross Profits

$               2,95,000.00

Operating Expenses:

Selling expenses

$                65,000.00

Administrative expenses

$                85,000.00

D

Total Operating expense

$               1,50,000.00

E = C - D

Operating Income

$               1,45,000.00

Other revenues & Expenses:

Interest and dividends

$                38,000.00

Gain on sale of investments

$                85,000.00

Interest

$              (32,000.00)

F

Restructuring costs

$              (61,000.00)

$                  30,000.00

G = E + F

Net Income before Income taxes

$               1,75,000.00

H = G x 40%

Income Tax expenses [40%]

$                  70,000.00

I = G - H

Net Income

$               1,05,000.00

Earning per share

$                             1.05


Related Solutions

The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION...
The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue $ 680,000 Interest revenue 41,000 Gain on sale of investments 88,000 Total revenues and gains 809,000 Expenses and losses: Cost of goods sold $ 370,000 Selling expense 68,000 Administrative expense 88,000 Interest expense 25,000 Restructuring costs 64,000 Income tax expense 48,500 Total expenses and losses 663,500 Net Income $ 145,500...
The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION...
The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue $ 760,000 Interest revenue 49,000 Gain on sale of investments 96,000 Total revenues and gains 905,000 Expenses and losses: Cost of goods sold $ 410,000 Selling expense 76,000 Administrative expense 96,000 Interest expense 33,000 Restructuring costs 72,000 Income tax expense 54,500 Total expenses and losses 741,500 Net Income $ 163,500...
Income Statement An inexperienced accountant for Prestwick Company prepared the following income statement for the month...
Income Statement An inexperienced accountant for Prestwick Company prepared the following income statement for the month of August, current year. PRESTWICK COMPANY AUGUST 31, CURRENT YEAR Revenues:  Services provided to customers $17,000  Investment by stockholders 5,000  Loan from bank  15,000 $37,000 Expenses:  Payments to long-term creditors $11,700  Expenses required to provide   services to customers 7,800  Purchase of land  16,000   35,500 Net income $  1,500 Statement of Cash Flows Prepare a revised income statement in accordance with generally accepted accounting principles....
Shown below is an income statement for 2017 that was prepared by a junior accountant at...
Shown below is an income statement for 2017 that was prepared by a junior accountant at Junior Corporation. Junior Corporation Income Statement December 31, 2017        Sales revenue..........................................................................................................       $975,000        Investment revenue...................................................................................................           19,500        Cost of merchandise sold..........................................................................................       (408,500)        Selling expenses......................................................................................................       (155,000)        Administrative expense.............................................................................................       (215,000)        Interest expense.......................................................................................................        (13,000)        Income before special items.......................................................................................         203,000        Special items               Loss on disposal of a segment of the business........................................................         (30,000)              ...
The Jenkins Corporation prepared the following statement of income and comparative balance sheets: JENKINS CORPORATION Income...
The Jenkins Corporation prepared the following statement of income and comparative balance sheets: JENKINS CORPORATION Income Statement For the Year Ended December 31, 2021 Sales                                                           $975,000      Less: Cost of Goods Sold                      467,000 Gross Profit                                                   508,000      Less: Depreciation expense                      68,600                 Other operating expenses                92,500      Plus:   Gain on Sale of Equipment              55,000 Income Before Taxes                                     401,000 Income Taxes                                                  60,000 Net Income                                                  $341,900 JENKINS CORPORATION Balance Sheet December 31            Assets        2021                     2020 Cash       ...
J Coronado, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement...
J Coronado, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement for the month ended January 31: Sales revenue $ 759,000 Cost of goods sold 313,500 Gross margin 445,500 Operating expenses   Selling expense $ 23,770   Administrative expense 50,710 74,480 Net operating income $ 371,020 Coronado sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal...
J Bonita, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement...
J Bonita, Ltd. is a local coat retailer. The store’s accountant prepared the following income statement for the month ended January 31: Sales revenue $ 769,000 Cost of goods sold 584,440 Gross margin 184,560 Operating expenses   Selling expense $ 23,970   Administrative expense 51,470 75,440 Net operating income $ 109,120 Bonita sells its coats for $250 each. Selling expenses consist of fixed costs plus a commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a variable component equal...
Margaret Rosenthal, accountant for Russell Manufacturing Company, prepared the following income statement for the quarter ending...
Margaret Rosenthal, accountant for Russell Manufacturing Company, prepared the following income statement for the quarter ending December 31, 2019. Sales $ 1,384,100 Purchases of materials (1) 247,290 Payroll (2) 267,100 Advertising 37,300 Administrative travel 27,900 Manufacturing utilities 50,000 Facility rental (3) 93,000 Depreciation (4) 64,100 Sales commissions 44,000 Annual insurance (manufacturing) 43,000 Office utilities 22,700 Management salaries (5) 391,000 Net income $ 96,710 Notes: (1) 90% of the materials were direct (2) 80% direct labour; 20% indirect labour (3) 80%...
The management accountant for Tony's Skateboard Company has prepared the following segmented income statement for each...
The management accountant for Tony's Skateboard Company has prepared the following segmented income statement for each of its three product lines.                                                Jammer         Cruise        Flight       Total       Sales                                $400,000     $250,000    $350,000 $1,000,000       Variable expenses             260,000       150,000      190,000   600,000       Contribution margin          140,000       100,000      160,000   400,000       Other costs                        20,000       30,000      20,000   70,000       Segment margin                120,000         70,000      140,000   330,000       Allocated avoidable costs 30,000       30,000      20,000   80,000       Segment income                 90,000         40,000      120,000   250,000       Allocated corporate costs 50,000      ...
The following income statement was prepared by Walters Corporation a seller of equipment for the year...
The following income statement was prepared by Walters Corporation a seller of equipment for the year ended Dec-31, 2013 Walters Corporation Comprehensive Income Statement For the year ended Dec-31, 2013 Sales revenue (Note: 1)……………………………………………………………………………………... $310,000 Cost of goods sold…………………………………………………………………………………………………………..…(140,000) Gross profit………………………………………………………………………………………………………………………. 170,000 Less: Operating Expenses. Selling and administrative expenses…………………………………………50,000 Loss on sale of Investment……………………………………………………… 15,000 (65,000) Other income and expense Gain on sale of plant assets…………….………………………………....... 40,000 Depreciation expense……………………………………………….……..….. (15,000) Rent Expense………………………………………………………….……..…….. (6,000) Dividend revenue…………………………………………………………….…… 50,000 Gain on disposal of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT