Question

The following is a partial trial balance for the Green Star Corporation as of December 31, 2018:

Account Title	Debits	Credits
Sales revenue		1,850,000
Interest revenue		44,000
Gain on sale of investments		64,000
Cost of goods sold	830,000
Selling expenses	230,000
General and administrative expenses	89,000
Interest expense	54,000
Income tax expense	144,000

130,000 shares of common stock were outstanding throughout 2018.

Required:
1. Prepare a single-step income statement for 2018, including EPS disclosures.
2. Prepare a multiple-step income statement for 2018, including EPS disclosures.

Answer 1

Solution:
1.
	GREEN STAR CORPORATION
	Income Statement
	For the Year Ended December 31, 2018
	Revenues and gains:
a	Sales revenue		1,850,000
b	Interest revenue		44,000
c	Gain on sale of investments		64,000
d=a+b+c	Total revenues and gains		1,958,000
	Expenses and losses:
e	Cost of goods sold	830,000
f	Selling expenses	230,000
g	General and administrative expenses	89,000
h	Interest expense	54,000
i=e+f+g+h	Total expenses and losses		1,203,000
j=d-i	Income before income taxes		755,000
k	Income tax expense		144,000
l=j-k	Net income		611,000
m=l/130,000	Earnings per share		4.70
Notes:	Earnings per share= Net income/shares of common stock were outstanding
	=611,000/130,000 = 4.70
2.
	GREEN STAR CORPORATION
	Income Statement
	For the Year Ended December 31, 2018
a	Sales revenue		1,850,000
b	Cost of goods sold		(830,000)
c=a-b	Gross profit		1,020,000
	Operating expenses:
d	Selling expenses	(230,000)
e	General and administrative expenses	(89,000)
f=d+e	Total operating expenses		(319,000)
g=c-f	Operating income		701,000
	Other income (expense):
h	Interest revenue	44,000
i	Gain on sale of investments	64,000
j	Interest expense	(54,000)
k=h+i-j	Total other income, net		54,000
l=g+k	Income before income taxes		755,000
m	Income tax expense		(144,000)
n=l-m	Net income		611,000
o=n/130,000	Earnings per share		4.70
Notes:	Earnings per share= Net income/shares of common stock were outstanding
	=611,000/130,000 = 4.70
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