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The preliminary 2021 income statement of Alexian Systems, Inc., is presented below: ALEXIAN SYSTEMS, INC. Income...

The preliminary 2021 income statement of Alexian Systems, Inc., is presented below:

ALEXIAN SYSTEMS, INC.
Income Statement
For the Year Ended December 31, 2021
($ in millions, except earnings per share)
Revenues and gains:
Sales revenue $ 437
Interest revenue 5
Other income 127
Total revenues and gains 569
Expenses:
Cost of goods sold 246
Selling and administrative expense 151
Income tax expense 43
Total expenses 440
Net Income $ 129
Earnings per share $ 12.90


Additional information:

  1. Selling and administrative expense includes $27 million in restructuring costs.
  2. Included in other income is $120 million in income from a discontinued operation. This consists of $90 million in operating income and a $30 million gain on disposal. The remaining $7 million is from the gain on sale of investments.
  3. Cost of goods sold was increased by $10 million to correct an error in the calculation of 2020’s ending inventory. The amount is material.


Required:
Prepare a revised income statement for 2021 reflecting the additional facts. Use a multiple-step format. Assume that an income tax rate of 25% applies to all income statement items, and that 10 million shares of common stock were outstanding throughout the year. (Enter your answers in millions rounded to 2 decimal places. Round EPS answers to 2 decimal places.)

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Answer #1

In the books of Alexian Systems,Inc

Revised Income Statement for the year ended 31.12.2021

Particulars Amount($ in millions) Amount($ in millions)
(A) Revenues & Gains:
Sales Revenue 437
Interest Revenue 5
Other Income (Gain on sale of investments) 7
Total Revenues & Gains 449
(B) Expenses:
Cost of goods sold (246+10) (256)
Selling & Administrative Expense (124)
Restructing costs (27)
Income Tax Expense [(449-256-151)*25%] (10.5)
Total Expenses (417.5)
(C) Income from continuing operations (A-B) 31.5
(D) Discontinued Operations:
Income from Operations (Net of tax) [90-25%] 67.5
Gain on disposal (Net of tax) [30-25%] 22.5 90
Net Income (C+D) 121.5
Earnings per share (121.5/10) [Net income/No. of shares] 12.15
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