Question

The following is a partial trial balance for General Lighting Corporation as of December 31, 2021:

There were 160,000 shares of common stock
 outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%.

 

Required:
1. Prepare a single-step income statement for 2021, including EPS disclosures. Be sure to include appropriate headings and subtotal titles. An example of a single-step income statement can be found in Illustration 4–3 of this chapter.

2. Prepare a multiple-step income statement for 2021, including EPS disclosures. Be sure to include appropriate headings and subtotal titles. An example of a multiple-step income statement can be found in Illustration 4–4 of this chapter.

Answer 1

1.

GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2021
Revenues and gains:
Sales revenue................................................			$2,350,000
Interest revenue.............................................			80,000
Total revenues and gains ..........................			2,430,000
Expenses and losses:
Cost of goods sold .......................................	$1,200,300
Selling expense.............................................	300,000
General and administrative expense.............	150,000
Interest expense............................................	90,000
Loss on sale of investments .........................	22,500
Loss on inventory write-down......................	200,000
Total expenses and losses ........................			1,962,800
Income before income taxes ...........................  Income tax expense * .....................................  Net income .....................................................			467,200   116,800 $ 350,400
Earnings per share .........................................			$2.19

 

          * $467,200 × 25%

 

2.

GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2021
Sales revenue ..................................................		$2,350,000
Cost of goods sold .........................................		1,200,300
Gross profit ....................................................		1,149,700
Operating expenses:
Selling expense.............................................	$300,000
General and administrative expense ............	150,000
Loss on inventory write-down......................	200,000
Total operating expenses .........................		650,000
Operating income ...........................................		499,700
Other income (expense):
Interest revenue ............................................	80,000
Loss on sale of investments .........................	(22,500)
Interest expense ...........................................	(90,000)
Total other income, net ............................		(32,500)
Income before income taxes ...........................		467,200
Income tax expense *......................................		116,800
Net income .....................................................		$350,400
Earnings per share**.......................................		$ 2.19

 

* $467,200 × 25%

Earnings per share**....................................... 

 

$ 2.19