Question

) Plaza Co. 31/12/19 Partial Trial Balance Data

                                                                                Debits                           Credits

Sales revenue 700,000

Interest revenue 60,000

Gain on sale of investments 110,000                   

Cost of goods sold                                           500,000

Salaries and wages                                           150,000

Depreciation expense                                         40,000

Interest expense                                                   30,000

Marketing and administrative expenses 60,000        

Plaza had 50,000 shares outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 30%

Required: Prepare a single-step income statement with basic earnings per share disclosure.

Answer 1

Solution:

Plaza Co

Income Statement

For the Year Ended December 31, 20190

Revenues and gains
Sales revenue		700,000
Other Income
Gain on sale of investments	110,000
Interest revenue	60,000
Total revenues and gains (110000+60000)		170,000
Expenses
Cost of goods sold	500,000
Salaries and wages	150,000
Depreciation expense	40,000
Interest expense	30,000
Marketing and administrative expenses	60,000
Total exenses (500000+150000+40000+30000+60000)		780,000
Income before income taxes (700,000+170000-780000)		90,000
Income tax expense (90,000 x 30%)		27,000
Net Income (90000-27000)		63,000
Earnings per share (63000/50000)		1.26