Question

The following incorrect income statement was prepared by the accountant of the Axel Corporation:

AXEL CORPORATION Income Statement For the Year Ended December 31, 2021
Revenues and gains:
Sales revenue				$	592,000
Interest revenue					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 expense		67,000
Administrative expense		87,000
Interest expense		16,000
Restructuring costs		55,000
Income tax expense		40,000
Total expenses and losses					590,000
Net Income				$	120,000
Earnings per share				$	1.20

Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)

  

Answer 1

Multi step income statement

Sales		592,000
Cost of goods sold		- 325,000
Gross profit		267,000
Operating expenses:
Selling expense	- 67,000
Administrative expense	- 87,000
Total Operating expenses		- 154,000
Operating income		113,000
Other revenues:
Interest revenue	32,000
Gain on sale of investments	86,000
Other expenses
Interest expense	- 16,000
Restructuring costs	- 55,000
		47,000
Profit before tax		160,000
Income tax expense		- 40,000
Net income		$120,000
Earnings per share		$1.20

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