Question

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

Interest revenue		$88,200		Accumulated depreciation—equipment		$42,200
Cash		53,200		Accumulated depreciation—buildings		30,200
Sales revenue		1,382,200		Notes receivable		157,200
Accounts receivable		152,200		Selling expenses		196,200
Prepaid insurance		22,200		Accounts payable		172,200
Sales returns and allowances		152,200		Bonds payable		102,200
Allowance for doubtful accounts		9,200		Administrative and general expenses		99,200
Sales discounts		47,200		Accrued liabilities		34,200
Land		102,200		Interest expense		62,200
Equipment		202,200		Notes payable		102,200
Buildings		142,200		Loss from earthquake damage		152,200
Cost of goods sold		623,200		Common stock		502,200
				Retained earnings		23,200

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.

Answer 1

Multiple-Step Income Statement
Sales Revenue	$1,382,200
Less: Sales Returns and allowances	($152,200)
Sales Discounts	($47,200)
Net Sales Revenue		$1,182,800
Cost of Goods Sold		$623,200
Gross Profit		$559,600
Operating Expenses:
Selling Expenses	$196,200
Administrative and general expenses	$99,200
Total Operating expenses		$295,400
Operating Profit		$264,200
Non-operating Income/expenses:
Interest Revenue	$88,200
Interest Expense	$62,200
Loss from Earthquake damage	$152,200
Total Non-operating expenses		$126,200
Profit before tax		$138,000
Income tax @ 34%		$46,920
Net profit		$91,080
EPS		$0.91