Question

Two accountants, Yuan Tsui and Sergio Aragon, are arguing about the merits of presenting an income statement in the multiple-step versus the single-step format. The discussion involves the following 2020 information for P. Bride Company (in thousands):

Administrative expenses					Selling expenses
	Officers’ salaries		$4,000			Delivery		$2,050
	Depreciation of office furniture and equipment		3,060			Sales commissions		67,640
Cost of goods sold			57,190			Depreciation of sales equipment		6,260
Rental revenue			14,330		Sales revenue			308,900
					Interest expense			1,730

Common shares outstanding for 2020 total 30,000 (in thousands). Income tax for the year was $18,130.

Prepare an income statement for the year ended December 31, 2020, using the multiple-step format, showing expenses by function. Include calculation of EPS.

Answer 1

Ans.	P. Bride Company
	Income   Statement
	For the Year Ended December 31, 2020
	Particulars	Amount	Amount	Amount
	Sales revenue			$308,900
	Cost of goods sold			$57,190
	Gross profit			$251,710
	Operating Expenses:
	Selling expenses:
	Delivery	$2,050
	Sales commissions	$67,640
	Depreciation of sales equipment	$6,260
	Total selling expenses		$75,950
	Administrative expenses:
	Office salaries	$4,000
	Depreciation of office furniture and equipment	$3,060
	Total administrative expenses		$7,060
	Total Operating expenses			$83,010
	Income from operations			$168,700
	Other revenues and Gains:
	Rental revenue		$14,330
	Other expenses and losses:
	Interest expenses		-$1,730	$12,600
	Income before income taxes			$181,300
	Less: Income tax			-$18,130
	Net Income			$163,170
	(/) Common shares outstanding			30000
	Earnings per share (EPS)			$5.439
	Earnings per share = Net income / Common shares outstanding