Chapter 4, Problem 4.5E

Income statement presentation

• LO4–1, LO4–5

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

AXEL CORPORATION Income Statement For the Year Ended December 31, 2018
Revenues and gains:
Sales		$592,000
Interest and dividends		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 expenses	67,000
Administrative expenses	87,000
Interest	26,000
Restructuring costs	55,000
Income taxes	60,000
Total expenses and losses		620,000
Net Income		$ 90,000
Earnings per share		$ 0.90

Required:

Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%.