Question

AP4-12A (Statement of income presentation: basic EPS) The following information was taken from Riddell Ltd.'s adjusted trial balance as at April 30, 2020 Sales revenue Interest revenue Utilities expense Insurance expense Cost of goods sold Distribution expenses Administrative expenses Depreciation expense Interest expense Income tax expense Dividends declared-Common shares Dividends declared-Preferred shares S1,045,800 7,200 24,000 6,000 396,000 230,250 90,250 81,000 16,500 56,700 15,000 20,000 Required a. Prepare a single-step statement of income for the year ended April 30, 2020 b. Prepare a multi-step statement of income for the year ended April 30, 2020 c. Determine Riddell's gross margin percentage for the year d. If Riddell had 35,000 common shares outstanding throughout the year, determine the company's basic earnings per share

Answer 1

Answer

• Requirement ‘a’ SINGLE STEP

Income Statement
for the year ended Apr 30,2020
Revenues:
Sales Revenue	$1,045,800
Interest Revenue	$7,200
Total Revenues		$1,053,000
Expenses:
Cost of Goods Sold	$396,000
Utilities expenses	$24,000
Insurance expense	$6,000
Distribution expense	$230,250
Administrative expense	$90,250
Depreciation expense	$81,000
Interest expense	$16,500
Income tax expense	$56,700
Total Expenses		$900,700
Net Income		$152,300

• Requirement ‘b’ MULTI STEP

Income Statement
for the year ended Apr 30,2020
Sales Revenue		$1,045,800
Cost of Goods Sold		$396,000
Gross Profits		$649,800
Operating Expenses:
Selling Expenses:
Distribution expense	$230,250
Administrative expenses:
Utilities expenses	$24,000
Insurance expense	$6,000
Administrative expense	$90,250
Depreciation expense	$81,000
Total Operating Expenses		$431,500
Operating Income		$218,300
Other Revenues & (Expenses):
Interest Revenue	$7,200
Interest expense	($16,500)	($9,300)
Net Income before Income tax		$209,000
Income tax expense		$56,700
Net Income		$152,300

• Requirement ‘c’

A	Gross Profits	$649,800
B	Sales Revenue	$1,045,800
C = (A/B) x 100	Gross Profit %	62.13%

• Requirement ‘d’

A	Net Income	$152,300
B	Preferred Stock Dividend	$20,000
C = A - B	Net Income for common stockholder	132300
D	Outstanding common stock shares	35,000
E = C/D	Basic Earnings per share	$                     3.78