Question

The following is a partial trial balance for General Lighting Corporation as of December 31, 2016:

Account Title	Debits			Credits
Sales revenue					3,200,000
Interest revenue					97,000
Loss on sale of investments		31,000
Cost of goods sold		1,360,000
Loss from write-down of inventory due to obsolescence		370,000
Selling expenses		470,000
General and administrative expenses		235,000
Interest expense		96,000

300,000 shares of common stock were outstanding throughout 2016. Income tax expense has not yet been recorded. The income tax rate is 40%.

Required:
1.	Prepare a single-step income statement for 2016, including EPS disclosures. (Round EPS answers to 2 decimal places.)

      

2.	Prepare a multiple-step income statement for 2016, including EPS disclosures. (Round EPS answers to 2 decimal places.)

      

Answer 1

1.SINGLE-STEP INCOME STATEMENT FOR THE YEAR ENDED 2016

GENERAL LIGHTING CORPORATION

Income Statement For the Year Ended December 31, 2016

Revenues and gains:

Sales revenue $ 32,00,000

Interest revenue $ 97,000

Total revenues and gains $ 32,97,000

Expenses and losses:

Cost of goods sold                                      $ 13,60,000

Loss from write-down of         - $ 3,70,000

inventory due to obsolescence                   

Loss on sale of investments $ 31,000

Selling expenses $ 4,70,000

General and administrative expenses         $ 2,35,000

Interest expense $ 96,000

Income tax expense ($735000*.40) $ 2,94,000

Total expenses and losses $ 28,56,000

Net income                                                 $ 4,41,000

Earnings per share (EPS)

Net income                                        $ 4,41,000

common stock outstanding               3,00,000

EPS                                                   $ 1.47/share

2.MULTI-STEP INCOME STATEMENT FOR THE YEAR ENDED 2016

GENERAL LIGHTING CORPORATION

Income Statement For the Year Ended December 31, 2016

Sales revenue                                                       $ 32,00,000

Cost of goods sold                                                         $ 13,60,000

Gross profit                                                                   $ 18,40,000

Operating expenses

Selling expenses $ 4,70,000

General and administrative expenses $ 2,35,000

Total Operating Expenses $ 7,05,000

Operating Income $ 11,35,000

Other income (expense):

Loss from write-down of         - ($ 3,70,000)

inventory due to obsolescence                   

Loss on sale of investments              ($ 31,000)

Interest expense                                ($ 96,000)

Interest revenue                                 $ 97,000    

Total other income, net $ 4,00,000

Income before income taxes $ 7,35,000

Income tax expense $ 2,94,000

Net income $ 4,41,000

Earnings per share (EPS)

Net income                                        $ 4,41,000

common stock outstanding               3,00,000

EPS                                                   $ 1.47/share