Question

Sunland Corporation had net sales of $2,427,500 and interest revenue of $40,000 during 2020. Expenses for 2020 were cost of goods sold $1,465,500, administrative expenses $220,600, selling expenses $289,300, and interest expense $47,900. Sunland’s tax rate is 30%. The corporation had 103,100 shares of common stock authorized and 71,990 shares issued and outstanding during 2020. Prepare a condensed multiple-step income statement for Sunland Corporation. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Answer and Explanation:

The preparation of the condensed multiple-step income statement is presented below:

Net sales $2,427,500

Less: Cost of goods sold -$1,465,500

Gross profit $962,000

Less:

Selling expenses $289,300

Administrative expenses $220,600 ($509,900)

Income from operations $452,100

Other revenue and gains

Interest revenue $40,000

Other expenses and losses

Interest expense $47,900 ($7,900)

Income before income tax $444,200

Income tax expense(30%) ($133,260)

Net income $310,940

Earnings per share($310,960 ÷ 71,990 shares) $4.32