Question

Multiple-Step and Single-Step Income Statements, and Statement of Comprehensive Income On December 31, 2019, Opgenorth Company listed the following items in its adjusted trial balance:

Loss from fire (pretax) $8,000 General and administrative expenses $17,000
Interest revenue 3,000 Sales 180,000
Selling expenses 15,000 Unrealized decrease in fair value of available-for-sale securities 1,800
Cost of goods sold 90,000 Loss on sale of equipment (pretax) 2,000

Additional data:
Seven thousand shares of common stock have been outstanding the entire year. The income tax rate is 30% on all items of income.

Required:
Prepare a 2019 multiple-step income statement. Disregard EPS disclosure.

Answer 1

Answer:

Net income $35,700

EPS $5.10

Explanation:

Preparation of 2019 multiple-step income statement.

OPGENORTH COMPANY Income Statement

For Year Ended December 31, 2019

Sales $180,000

Less Cost of goods sold 90,000

Gross profit $90,000

(180,000-90,000)

OPERATING EXPENSES

Selling expense $15,000

General and administrative expenses 17,000

Total operating expense 32000

Operating income $58,000

(90,000-32,000)

OTHER INCOME

Interest revenue $3,000

Loss on sale of equipment (pretax)

(2,000)

Loss from fire (8,000) (7,000)

(3,000-2,000-8,000)

Income before tax 51,000

(58,000-7,000)

Income tax $15,300

(30%*51,000)

Net income $35,700

(51,000-15,300)

Components of Income EPS

EPS ($35,700/$7,000) $5.10

Therefore the Net income for 2019 multiple-step income statement will be $35,700 and the EPS is $5.10