Question

The following information is available for Ivanhoe Corporation for the year ended December 31, 2020: sales revenue $770,000, other revenues and gains $91,500, operating expenses $109,000, cost of goods sold $470,000, other expenses and losses $34,000, and preferred stock dividends $31,850. The company’s tax rate was 30%, and it had 49,000 shares outstanding during the entire year.

Prepare a corporate income statement.

Answer 1

Income Statement

Sales revenue	770,000
Cost of goods sold	-470,000
Gross profit	300,000
Operating expenses	-109,000
Operating income	191,000
Other revenue and gains	91,500
Other expenses and losses	-34,000
Profit before tax	248,500
Income tax expense	-74,550
Net income	$173,950
Earning per share	$2.9

Earning per share = (Net income - Preferred dividend)/Number of common shares outstanding

= (173,950 - 31,850)/49,000

= 142,100/49,000

= $2.9

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