Question

The following is a partial trial balance for the Green Star Corporation as of December 31, 2021:
Account Title Debits Credits
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investments 55,000
Cost of goods sold 740,000
Selling expenses 185,000
General and administrative expenses 80,000
Interest expense 45,000
Income tax expense 135,000
There were 100,000 shares of common stock outstanding throughout 2021.
Required:
Prepare a single-step income statement for 2021, including EPS disclosures.
Prepare a multiple-step income statement for 2021, including EPS disclosures.

Answer 1

Answer:

1. Single-Step Income

                         Income statement

Revenues and gains:                             Amount$

Sales revenue                                         1,400,000

Interest revenue                                     35,000

Gain on sale of investment                    55,000    

Total revenues and gains                       1,490,000

Expenses and losses

Cost of goods sold        740,000

General and administrative  80,000  

expenses

Selling expenses                   185,000  

Interest expense                    45,000

Total expenses and losses                     1,050,000

Income before income tax                      440,000

Income tax expense                                -135,000

Net income                                               305,000

EPS = Net income/Number of common shares

EPS = 305,000/100,000

EPS = 3.05

2.  Multi-Step Income

                               Income statement

Particulars                                               Amount$

Sales                                                               1,400,000

Cost of goods sold                                         -740,000

Gross profit                                                      660,000

Operating expenses

General and administrative  80,000

expenses

Selling expenses                    185,000

Total operating expenses                               -265,000

Operating income                                             395,000

Other incomes and expenses

Interest revenue                       35,000  

Gain on sale of investment      55,000  

Interest expense                      -45,000

Total other income, net                                      45,000

Income before income tax                                 440,000

Income tax expense                                          -135,000

Net income                                                         $305,000

EPS = Net income/Number of common shares

EPS = 305,000/100,000

EPS = 3.05