Intermediate Accounting w/ Annual Report; Connect Access Card
Intermediate Accounting w/ Annual Report; Connect Access Card
8th Edition
ISBN: 9781259546860
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4.3E

1.

To determine

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.

Earnings per share = NetincomeNumber of common shares outstanding

To Prepare: A single-step income statement for 2016, including EPS.

1.

Expert Solution
Check Mark

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

Income from tax expenses =  Income before income taxes×Taxrate= $467,200 × 40%= $186,880                     (a)

Calculate the EPS

Earningspershare = Net income Number of common shares outstanding=$280,320$300,000=$0.93 (b)

Conclusion

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 determine

To Prepare:  Multiple-step income statement for 2016, including EPS.

2.

Expert Solution
Check Mark

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)

Conclusion

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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Chapter 4 Solutions

Intermediate Accounting w/ Annual Report; Connect Access Card

Ch. 4 - Prob. 4.10QCh. 4 - Define earnings per share (EPS). For which income...Ch. 4 - Prob. 4.13QCh. 4 - Describe the purpose of the statement of cash...Ch. 4 - Prob. 4.15QCh. 4 - Explain what is meant by noncash investing and...Ch. 4 - Distinguish between the direct method and the...Ch. 4 - Prob. 4.19QCh. 4 - Prob. 4.18QCh. 4 - Prob. 4.20QCh. 4 - Prob. 4.1BECh. 4 - Prob. 4.2BECh. 4 - Prob. 4.3BECh. 4 - Multiple -step income statement LO41, LO43 The...Ch. 4 - Prob. 4.5BECh. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - E 4–16 Statement of cash flows; directly from...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Prob. 4.19ECh. 4 - Prob. 4.20ECh. 4 - Prob. 4.21ECh. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Concepts; terminology LO41, LO42, LO43, LO44,...Ch. 4 - Prob. 4.25ECh. 4 - Prob. 4.26ECh. 4 - Prob. 4.27ECh. 4 - Prob. 4.28ECh. 4 - Prob. 1CPACh. 4 - Prob. 2CPACh. 4 - Prob. 3CPACh. 4 - Prob. 4CPACh. 4 - Prob. 5CPACh. 4 - Prob. 6CPACh. 4 - Prob. 7CPACh. 4 - Prob. 1CMACh. 4 - Prob. 2CMACh. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Prob. 4.6PCh. 4 - Prob. 4.7PCh. 4 - Prob. 4.8PCh. 4 - Prob. 4.9PCh. 4 - Prob. 4.10PCh. 4 - Prob. 4.11PCh. 4 - Interim financial reporting Appendix 4 Branson...Ch. 4 - Prob. 4.1BYPCh. 4 - Judgment Case 42 Restructuring costs LO43 The...Ch. 4 - Prob. 4.3BYPCh. 4 - Prob. 4.4BYPCh. 4 - Prob. 4.5BYPCh. 4 - Prob. 4.6BYPCh. 4 - Prob. 4.7BYPCh. 4 - IFRS Case 48 Statement of cash flows;...Ch. 4 - Prob. 4.9BYPCh. 4 - Prob. 4.10BYPCh. 4 - Prob. 4.12BYPCh. 4 - Prob. 4.13BYPCh. 4 - Prob. 1AFKC
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