Question

Exercise 4-5 Income statement presentation [LO4-1, 4-5] The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION Income Statement For the Year Ended December 31, 2018

Revenues and gains:
Sales $ 592,000

Interest and dividends 32,000

Gain on sale of investments 86,000

                        Total revenues and gains 710,000

Expenses and losses:

Cost of goods sold $ 325,000

Selling expenses 67,000

Administrative expenses 87,000

Interest 26,000

Restructuring costs 55,000

Income taxes 60,000

Total expenses and losses 620,000

Net Income $ 90,000

Earnings per share $ 0.90

Required: Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)

Answer 1

Multiple step income statement :

Sales		592000
Less: Cost of goods sold		-325000
Gross profit		267000
Less: Operating expense
Selling expense	-67000
Administrative expense	-87000
Restructuring costs	-55000
Total operating expense		-209000
Operating income		58000
Other revenue
Interest and dividend	32000
Gain on sale of investment	86000
Other expense
Interest expense	-26000	92000
Income before tax		150000
Income tax		-60000
Net income		90000
EPS		0.90