Question

Plano Co. 12/31/2021
Partial Trial Balance Data	Debits		Credits
Sales revenue			632,000
Interest revenue			75,000
Gain on sale of investments			125,000
Cost of goods sold	450,000
Selling expense	135,000
Interest expense	25,000
General and administrative expenses	90,000

Plano had 50,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 25%.

Required:
Prepare a multiple-step income statement with earnings per share disclosure. (Amounts to be deducted should be indicated with a minus sign. Round Earnings per share answer to 2 decimal places.)

Answer 1

A multiple-step income statement is prepared as follows:

	$	$
Sales Revenue		632,000
Less: Cost of Goods Sold		(450,000)
Gross Profit		182,000
Less: Operating Expenses
Selling expense	135,000
General and administrative expenses	90,000
Total Operating Expenses		225,000
Operating Loss		(43,000)
Other Income (Loss)
Gain on sale of investments	125,000
Interest revenue	75,000
Interest expense	(25,000)
Other Income		175,000
Net Income before tax		132,000
Tax 25%		33,000
Net Income		$99,000

Earnings per share = Net Income / Total Outstanding Shares

                            = $99,000 / 50,000 Shares

                          = 1.98