Question

Rembrandt Paint Company had the following income statement items for the year ended December 31, 2016 ($ in 000s): Net sales $ 31,000 Cost of goods sold $ 17,000 Interest income 330 Selling and administrative expenses 3,800 Interest expense 610 Restructuring costs 2,100 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.9 million and a gain on disposal of the component’s assets of $4.6 million. 600,000 shares of common stock were outstanding throughout 2016. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss). Required: Prepare a multiple-step income statement for 2016, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.)

Answer 1

Rembrandt Paint Company

Multiple step Income Statement

For the year ended December 31, 2016 ($'000)

Sales	31,000
Less: Cost of goods sold	-17,000
Gross profit	14,000
Operating expenses:
Selling and administrative expenses	- 3,800
Total operating expenses	- 3,800
Operating income	10,200
Other incomes and expenses :
Interest income	330
Interest expense	- 610
Restructuring costs	-2,100
Loss on disposal of plastic business	-2,900
Gain on disposal of component's assets	4,600
Income before tax	9,520
Income tax @ 40%	- 3,808
Net income	5,712

EPS = Net income/Number of shares

= 5,712,000/600,000

= $9.52