The following balances were taken from the books of Alonzo Corp. on December 31, 2017. Interest...

The following balances were taken from the books of Alonzo Corp. on December 31, 2017. Interest revenue $86,000 Accumulated depreciation—equipment $40,000 Cash 51,000 Accumulated depreciation—buildings 28,000 Sales revenue 1,380,000 Notes receivable 155,000 Accounts receivable 150,000 Selling expenses 194,000 Prepaid insurance 20,000 Accounts payable 170,000 Sales returns and allowances 150,000 Bonds payable 100,000 Allowance for doubtful accounts 7,000 Administrative and general expenses 97,000 Sales discounts 45,000 Accrued liabilities 32,000 Land 100,000 Interest expense 60,000 Equipment 200,000 Notes payable 100,000 Buildings 140,000 Loss from earthquake damage 150,000 Cost of goods sold 621,000 Common stock 500,000 Retained earnings 21,000 Assume the total effective tax rate on all items is 34%. Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Expert Solution

Alonzo Corp.
Income Statement
For the year ended December 31, 2017
Sales
Sales revenue		1380000
Less: Sales discounts	45000
Less: Sales returns and allowances	150000	195000
Net sales		1185000
Cost of goods sold		621000
Gross profit		564000
Operating expenses:
Selling expenses	194000
Administrative and general expenses	97000	291000
Operating income		273000
Non-operating incomes and expenses:
Interest revenue		86000
Interest expense		60000
Income before taxes		299000
Income tax		101660
Income from continuing operations		197340
Extraordinary items:
Loss from earthquake		99000
Net Income		98340
Earnings Per Share		$ 0.98

Loss from earthquake is shown net of tax which is $150000 - (34% x $150000) = $150000 - $51000 = $99000

Earnings Per Share = $98340/100000 = $0.9834 = $0.98

Note: Insert appropriately in required format if any, since the same is not provided with the question. Also no instructions provided regarding use of minus sign, hence complete accordingly as required.

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