Question

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

Account Title	Debits	Credits
Sales revenue		2,500,000
Interest revenue		83,000
Loss on sale of investments	24,000
Cost of goods sold	1,220,000
Loss on inventory write-down (obsolescence)	230,000
Selling expense	330,000
General and administrative expense	165,000
Interest expense	82,000

 
There were 200,000 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.

Answer 1

Requirement 1: GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue Interest revenue $ $ 25,00,000 83,000 $ 25,83,000 Total revenues and gains Expenses and losses: Cost of goods sold Selling expense General and administrative expense Loss on sale of investments Interest expense Loss on inventory write-down $ $ $ 12,20,000 3,30,000 1,65,000 24,000 82,000 2,30,000 $ Total expenses and losses Income before income taxes Income tax expense Net income $ $ $ $ 20,51,000 5,32,000 1,33,000 3,99,000 Earnings per share =399000/200000 shares $1,99

Requirement 2 GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021. Sales revenue Cost of goods sold Gross profit Operating expense: Selling expense $ 3,30,000.00 General and administrative expense $ 1,65,000.00 Loss on inventory written down $ 2,30,000.00 $ 25,00,000.00 $ 12,20,000.00 $ 12,80,000.00 $ 7,25,000.00 $ 5,55,000.00 Operating income Other Income (expense) Interest Revenue Interest Expense Loss on sale of investments Other income (Net) Income from continuing operations before income tax Income tax expense Net income $ 83,000.00 $ (82,000.00) $ 24,000,00) $ (23,000.00) $ 5,32,000.00 $ 1,33,000.00 $ 3,99,000.00 Earnings per share : $399000/200000 shares $1.99 Note : Eps = $1.99 or $2.00 As per system Requirement