Question

Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to Metlock Company ($000 omitted). Administrative expense Officers' salaries $5,401 Depreciation of office furniture and equipment 4,461 Cost of goods sold 61,071 Rent revenue 17,731 Selling expense Delivery expense 3,191 Sales commissions 8,481 Depreciation of sales equipment 6,981 Sales revenue 97,001 Income tax 9,571 Interest expense 2,361 Common shares outstanding for 2020 total 26,428 (000 omitted).

Prepare an income statement for the year 2020 using the single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Income statement for the year 2020 using the single-step form is prepared is as follows:

                                                 Metlock Company

                                               Income statement

                                               for the year 2020

	$ (000)	$(000)
Revenue:
Sales revenue	97,001
Rent revenue	17,731
Total Revenue		114,732
Expenses
Cost of goods sold	61,071
Administrative expense Officers' salaries	5,401
Depreciation of office furniture and equipment	4,461
Selling expense Delivery expense	3,191
Sales commissions	8,481
Depreciation of sales equipment	6,981
Interest expense	2,361	91,947
Income before tax		22,785
Income tax		9,571
Net Income		$13,214

Earning Per Share = (Net Income - Prefrence Dividend) / Common shares outstanding

                           = ($13,214 - $0) / 26,428

                         = $0.50

Earning Per Share is $0.50