Question

The following is a partial trial balance for General Lighting Corporation as of December 31, 2021:

Account Title	Debits	Credits
Sales revenue		2,700,000
Interest revenue		87,000
Loss on sale of investments	26,000
Cost of goods sold	1,260,000
Loss on inventory write-down (obsolescence)	270,000
Selling expense	370,000
General and administrative expense	185,000
Interest expense	86,000

There were 300,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%.

Required:

1. Prepare a single-step income statement for 2021, including EPS disclosures.

2. Prepare a multiple-step income statement for 2021, including EPS disclosures.

Prepare a single-step income statement for 2021, including EPS disclosures. (Round EPS answer to 2 decimal places.)

GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenueselected answer correct not attempted $2,700,000selected answer correct Interest revenueselected answer correct not attempted 87,000selected answer correct not attempted not attempted not attempted Total revenues and gains 2,787,000 Expenses and losses: Cost of goods soldselected answer correct $1,260,000selected answer correct Loss on sale of investmentsselected answer correct 26,000selected answer correct Loss on inventory write-downselected answer correct 270,000selected answer correct Selling expenseselected answer correct 370,000selected answer correct General and administrative expenseselected answer correct 185,000selected answer correct Interest expenseselected answer correct 86,000selected answer correct not attempted not attempted not attempted not attempted Total expenses and losses 2,197,000 Income before income taxes 590,000 Income tax expenseselected answer correct 147,500selected answer correct Net income $442,500selected answer correct Earnings per share $1.48selected answer correct

GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021 Sales revenueselected answer correct $2,700,000selected answer correct Cost of goods soldselected answer correct 1,260,000selected answer correct Gross profit 1,440,000 Operating expenses: Selling expenseselected answer correct $370,000selected answer correct General and administrative expenseselected answer correct 185,000selected answer correct Loss on inventory write-downselected answer correct 270,000selected answer correct not attempted not attempted not attempted not attempted Total operating expenses 825,000 Operating income 615,000 Other income (expense): Interest revenueselected answer correct 87,000selected answer correct Loss on sale of investmentsselected answer correct (26,000)selected answer correct Interest expenseselected answer correct (86,000)selected answer correct not attempted not attempted Total other income (expense), net (25,000) Income before income taxes 590,000 Income tax expenseselected answer correct 236,000selected answer incorrect Net income $442,500selected answer correct Earnings per share $1.33selected answer incorrect

Answer 1

Single step

GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2021
Revenue and gains:
Sales Revenue	$   2,700,000
Interest Revenue	$         87,000
Total Revenue		$   2,787,000
Expenses and Losses:
Cost of goods sold	$   1,260,000
Loss on sale of investment	$         26,000
Loss on inventory write down	$      270,000
Selling expense	$      370,000
General and administrative expense	$      185,000
Interest expense	$         86,000
Total Expenses and Losses		$   2,197,000
Income before Income tax		$      590,000
Tax expense		$      147,500
Net Income		$      442,500
Earning per share		$             1.48

Multi step

GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2021
Revenue and gains:
Sales Revenue		$   2,700,000
Cost of Goods sold		$   1,260,000
Gross Profit		$   1,440,000
Operating Expenses
Selling expense	$      370,000
General and administrative expense	$      185,000
Loss on inventory write down	$      270,000
Total Operating Expenses		$      825,000
Operating Income		$      615,000
Other Income/ (Expense)
Loss on sale of investment	$      (26,000)
Interest Expense	$      (86,000)
Interest Income	$         87,000
Total other income/(expenses)		$      (25,000)
Income before taxes		$      590,000
Tax expense		$      147,500
Net Income		$      442,500
Earning per share		$             1.48