Question

The following incorrect income statement was prepared by the accountant of the Axel Corporation:

AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains:

Sales revenue $660,000
Interest revenue 39,000
Gain on sale of investments 86,000
Total revenues and gains 785,000
Expenses and losses:
Cost of goods sold $360,000
Selling expense 66,000
Administrative expense 86,000
Interest expense 23,000
Restructuring costs 62,000
Income tax expense 47,000
Total expenses and losses 644,000
Net Income $141,000
Earnings per share $1.41

Required:
Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%.

Answer 1

AXEL CORPORATION

Income Statement For the Year Ended December 31, 2021

Particulars Amount Amount

Sales Revenue $6,60,000

Less : Cost of Goods Sold $360,000

Gross Profit $300,000

Less: Operating Expenses

Selling Expenses $66,000

Administrative Expenses $86,000 $152,000

Operating Income $148,000

Non- Operating and others

Restructuring cost -$62,000

Interest Expenses -$23,000

Interest Revenue $39,000

Gain on sale of investment $86,000 $40,000

Net Income before Taxes $188,000

Less : Income Tax Expenses $47,000

Net income after Taxes $141,000

The Earning Per Shares remains $1.41