Question

prepare an income statement for the year 2020 in single step form

The financial records of Blossom Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept certain statistical data related to the income statement as follows. 1. The beginning merchandise inventory was $101.200 and decreased 20% during the current year. 2. Sales discounts amount to $19,380 3. 27,902 shares of common stock were outstanding for the entire year. 4. Interest expense was $21,600. 5. The Income tax rate is 30%. 6. Cost of goods sold amounts to $640,000. 7. Administrative expenses are 20% of cost of goods sold but only 8% of gross sales. 8. Four-fifths of the operating expenses relate to sales activities

Answer 1

BLOSSOM INC,
Income Statement
For the Year Ended December 31, 2020
Revenues
Net sales		$1580620
Expenses
Cost of goods sold	$640000
Administrative expenses	128000
Selling expenses	512000
Interest expenses	21600
Total expenses		-1301600
Income before taxes		279020
Income taxes ($279020*30%)		-83706
Net income (loss)		$195314
Earnings per share (EPS)		$7 per share

Administrative expenses= 20%*Cost of goods sold

= 20%*$640000= $128000

Administrative expense is 8% of the gross sales that means gross sales is

Administrative expenses= 8%*Gross sales

$128000= 8%*Gross sales

Gross sales= $128000/8%= $1600000

Net sales= Gross sales-Sales discounts

= $1600000-19380= $1580620

Selling expenses= $640000*4/5= $512000

Earnings per share= Net income/Number of outstanding common stock

= $195314/27902= $7 per share