Question

Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to Sheridan Company ($000 omitted). Administrative expense     Officers' salaries $5,420     Depreciation of office furniture and equipment 4,480 Cost of goods sold 61,090 Rent revenue 17,750 Selling expense     Delivery expense 3,210     Sales commissions 8,500     Depreciation of sales equipment 7,000 Sales revenue 97,020 Income tax 9,590 Interest expense 2,380 Common shares outstanding for 2020 total 32,750 (000 omitted).

Prepare an income statement for the year 2020 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

$97,020 $61,090 $35,930 Sheridan Company Income Statement (Multi-Step) For Year Ended Decemebr 31, 2020 (In thousands, except earnings per share) Sales Cost of goods sold Gross Profit Operating Expenses: Selling expenses Delivery expense $3,210 Sales commissions $8,500 Depreciation of sales equipment $7,000 Administrative Expenses Officers' salaries $5,420 Depreciation of office furniture and equipment $4,480 Total operating expenses Income From Operations Other Revenues and Gains: Rent Revenue $18.710 $9,900 $28,610 $7,320 $17.750 $25,070 Other Expenses and Losses: Interest expense Income before income tax Income tax Net Income $2,380 $22,690 $9,590 $13,100 Weighted average of shares Earning Per Share 32,750 $0.40