Question

The following is a partial trial balance for the Green Star Corporation as of December 31, 2021:
 

Account Title	Debits	Credits
Sales revenue		1,650,000
Interest revenue		40,000
Gain on sale of investments		60,000
Cost of goods sold	790,000
Selling expenses	210,000
General and administrative expenses	85,000
Interest expense	50,000
Income tax expense	140,000

 
There were 100,000 shares of common stock outstanding throughout 2021.
 

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.

Answer 1

1.

Single Step Income Statement
Income Statement
31-Dec-2021
Revenues and Gains:
Sales Revenue		16,50,000
Indirect revenue		40,000
Gain on Sale of investment		60,000
Total revenue and gains		17,50,000
Expenses and Losses:
Cost of Goods Sold	-7,90,000
Selling Expenses	-2,10,000
General and Administrative Expense	-85,000
Interest Expenses	-50,000
Total Expenses and Losses		-11,35,000
Income Before Income tax		6,15,000
Income tax expense		-1,40,000
Net income		4,75,000
EPS	(475000/100000)	$ 4.75

2.

Multiple Step Income Statement
Income Statement
31-Dec-2021
Sales Revenue		16,50,000
Cost of Goods Sold		-7,90,000
Gross Profit		8,60,000
Operating Expense
Selling Expenses	-2,10,000
General and Administrative Expense	-85,000
Total Operating Expenses		-2,95,000
Operating Profit		5,65,000
Other Income/Expenses
Indirect revenue	40,000
Gain on Sale of investment	60,000
Interest Expenses	-50,000
Total Other income-net		50,000
Income Before Income tax		6,15,000
Income tax expense		-1,40,000
Net income		4,75,000
EPS		$ 4.75