Question

Earnings per Share and Multiple-Step Income Statement
The following summarized data relate to Bowden Corporation's current operations:

Sales revenue	$894,000
Cost of goods sold	540,000
Selling expenses	69,600
Administrative expenses	86,400
Loss on sale of equipment	6,000
Income tax expense	76,800
Shares of common stock
Outstanding at January 1	13,000	shares
Additional issued at May 1	8,400	shares
Additional issued at November 1	2,400	shares

Required
Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement.

Do not use negative signs with any of your answers below.

BOWDEN CORPORATION Income Statement For the Year Ended December 31
Sales Revenue		Answer
Cost of Goods Sold		Answer
Gross Profit on Sales		Answer
Selling Expenses	Answer
Administrative Expenses	Answer	Answer
Operating Income		Answer
Loss on Sale of Equipment		Answer
Income before Taxes		Answer
Income Tax Expense		Answer
Net Income		Answer
Earnings per share of Common Stock		Answer

Answer 1

INCOME STATEMENT

Particular	amount ($)
Sales	$894000
(-) cost of goods sold	($540000)
Gross profit	$354000
(-) selling expenses	($69600)
(-) administrative expenses	($86400)
Operating income	$198000
(-) loss of sale of equipment	($6000)
Income before tax	$192000
(-) income tax expense	($76800)
Net income	$115200
Earnings per share (Note below)	$3.40

Note: earnings per share = net income available to common stock holders/outstanding shares

Outstanding shares =13000+8400+12400 = 33800

Therefore. Earnings per share = $115200/33800 = $ 3.40

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