
Concept explainers
1.
Income Statement
The financial statement which reports revenues and expenses from business operations and the result of those operations is reported as net income or net loss for a particular time period is referred to as income statement
Multi step income statement
A multiple step income statement refers to the income statement that shows the operating, and non-operating activities of the business, under separate head.
Single-step income statement
Format in which a single subtotal of all revenue items are listed in one column and a single subtotal of all expense items including cost of goods sold are listed in another column. Thus, the subtotal of all expense items is deducted from the subtotal of all revenue items to arrive at the net income at the bottom of the statement.
EPS (Earnings Per Share)
The share or portion of profit earned by each share is called as earnings per share.
To Prepare: A single-step income statement for 2016, including EPS.
1.

Explanation of Solution
Prepare a single-step income statement for 2018 for Corporation G.
Corporation G | ||
Single- Step Income Statement | ||
For the Year Ended December 31, 2018 | ||
Particulars | Amount ($) | Amount ($) |
Revenues and gains: | ||
Sales | 2,350,000 | |
Interest | 80,000 | |
Total revenues and gains | 2,430,000 | |
Less: Expenses and losses: | ||
Cost of goods sold | 1,200,300 | |
Selling | 300,000 | |
General and administrative | 150,000 | |
Interest | 90,000 | |
Loss on sale of investments | 22,500 | |
Loss from inventory write-down | 200,000 | |
Total expenses and losses | (1,962,800) | |
Income before income taxes | 467,200 | |
Less: Income tax expense (a) | (186,880) | |
Net income | 280,320 | |
Earnings per share (b) | $0.93 | |
Table (1)
Working Notes:
Calculate the income tax expenses
Calculate the EPS
Hence, the net income of the Corporation G under Single–step income statement is $280,320 with the EPS value of $0.93.
2.
To Prepare: Multiple-step income statement for 2016, including EPS.
2.

Explanation of Solution
Prepare the multi-step income statement for 2016, Corporation G.
Corporation G | ||
Multi- Step Income Statement | ||
For the Year Ended December 31, 2016 | ||
Particulars |
Amount ($) |
Amount ($) |
Sales revenue | 2,350,000 | |
Cost of goods sold | 1,200,300 | |
Gross profit | 1,149,700 | |
Operating expenses: | ||
Selling | 300,000 | |
General and administrative | 150,000 | |
Loss from inventory write-down | 200,000 | |
Total operating expenses | 650,000 | |
Operating income | 499,700 | |
Other income (expense): | ||
Interest revenue | 80,000 | |
Loss on sale of investments | (22,500) | |
Interest expense | (90,000) | |
Total other income (expense), net | (32,500) | |
Income before income taxes | 467,200 | |
Income tax expense (a) | 186,880 | |
Net income | 280,320 | |
Earnings per share (b) | 0.93 |
Table (2)
Hence, the net income of the Corporation G under Multi–step income statement is $280,320 with the EPS value of $0.93.
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