Question

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

Debits Credits 2,900,000 91,000 Account Title Sales revenue Interest revenue Loss on sale of investments Cost of goods sold Loss on inventory write-down (obsolescence) Selling expense General and administrative expense Interest expense 28,000 1,300,000 310,000 410,000 205,000 90,000

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: Prepare a single-step income statement for 2021, including EPS disclosures. Prepare a multiple-step income statement for 2021, including EPS disclosures.

Answer 1

Solution

Single-step income statement GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue Interest revenue $ 2,900,000 $ 91,000 $ 2,991,000 Total revenues and gains Expenses and losses: Cost of goods sold Loss on inventory write-down Loss on sale of investments Selling expense General and administrative expense Interest expense $ $ 1,300,000 $ 310,000 28,000 $ 410,000 $ 205,000 $ 90,000 Total expenses and losses Income before income taxes Income tax expense Net income Earnings per share $ 2,343,000 $ 648,000 $ 162,000 $ 486,000 $ 2.43

Multiple-step income statement GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains: Sales revenue Cost of goods sold Gross Profit Operating Expenses: Selling expense $ 410,000 General and administrative expense $ 205,000 Loss on inventory write-down $ 310,000 $ 2,900,000 $ 1,300,000 $ 1,600,000 $ $ 925,000 675,000 Total Operating Expenses: Operating Income Other Income (expenses) Interest revenue Loss on sale of investments Interest expense Total other Income (expenses), net Income before income taxes Income tax expense Net income Earnings per share $ $ $ 91,000 (28,000) (90,000) $ $ $ $ $ (27,000) 648,000 162,000 486,000 2.43

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