Question

Exercise 4-5 (Part Level Submission) 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 2017 information related to Culver Company ($000 omitted). Administrative expense     Officers' salaries $5,039     Depreciation of office furniture and equipment 4,099 Cost of goods sold 60,709 Rent revenue 17,369 Selling expense     Delivery expense 2,829     Sales commissions 8,119     Depreciation of sales equipment 6,619 Sales revenue 96,639 Income tax 9,209 Interest expense 1,999 Common shares outstanding for 2017 total 40,550 (000 omitted).

(a) Prepare an income statement for the year 2017 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.) PLEASE GIVE ME ACCURATE CALCULATIONS STEP BY STEP ALONG WITH NAMING OF TRANSACTION TITLES THE NAMING OF THE TRANSACTIONS IS MUCH CONFUSING TO ME ....

Answer 1

C Company Income Statement For the year ended December 31, 2017 (in thousands expect earning per share) Particulars Amount($) Amount($) Sales 96,639 Less: Cost of goods sold 60,709 Gross profit 35,930 Operating expense Selling expense Delivery expense 2,829 Sales commision 8,119 Depriciation on sales equipment 6,619 Total selling expense 17,567 Administrative expense Office salaries 5,039 Depriciation on office furniture and equipme 4,099 Total administrative expense 9,138 Income from operations Add: Other revenue and gains Rent revenue 17,369 26,594 Less Other expense and loss Less: Interest expense 1,999 Income before tax 33,820 Less:Income tax 9,209 Net income 24,611 Earning per share 0.61 9,225

• Gross profit of $35,930 is calculated by deducting cost of goods sold from sales revenue.
• Income from operations amounting $9,225 is calculated by deducting selling and administrative expense from gross profit.
• income before tax amounting $33,820 is calculated by adding rent revenue and deducting rent expense into income from operations.
• net income amounting $24,611 is calculated by deducting income tax from income before tax.
• earning per share amounting $0.61 is calculated by dividing income after tax amounting $24,611 from number of shares 40,550.