Question

The following incorrect income statement was prepared by the accountant of the Axel Corporation: $680,000 41,000 88,000 809,000 AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue Interest revenue Gain on sale of investments Total revenues and gains Expenses and losses: Cost of goods sold $370,000 Selling expense 68,000 Administrative expense 88,000 Interest expense 25,000 Restructuring costs 64,000 Income tax expense 48,500 Total expenses and losses Net Income 663,500 $145,500 Earnings per share $ 1.46

Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%.

Answer 1

Sales revenue		680000
Cost of goods sold		370000
Gross profit		310000
Operating expense
Selling expense	68000
Administrative expense	88000
Restructuring cost	64000
Total operating expense		220000
Operating income		90000
Other income (expense)
Interest revenue	41000
Gain on sale of investment	88000
Interest expense	-25000
Total other income, net		104000
Income before income taxes		194000
Income tax expense		48500
Net income		145500
EPS		1.46