Question

The accountant of Weatherspoon Shoe Co. has compiled the following information from the company's records as a basis for an income statement for the year ended December 31, 2010.Rental revenue $29,000Interest expense 18,000Market appreciation on land above cost 31,000Wages and salaries-sales 114,800Materials and supplies-sales 17,600Income tax 30,600Wages and salaries-administrative 135,900Other administrative expenses 51,700Cost of goods sold 516,000Net sales 980,000Depreciation on plant assets (70% selling, 30% administrative) 65,000Dividends declared 16,000There were 20,000 shares of common stock outstanding during the year.(a) Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g. 5.25. For multiple entries list from largest to smallest amounts, e.g. 10, 5, 1. Enter all amounts as positive amounts and subtract where necessary.)

Answer 1

Explanation:

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

                                Weather spoon Shoe Co

                              Multiple Income statement  

                    For the year ended December 31, 2010  

Net sales            $980,000

Less:  Cost of goods sold   $496,000

Gross profit on sales $484,000

Operating Expenses

Less:

Selling expenses

Wages and salaries  $114,800

Depreciation  expenses (70% × $65,000)   $45,500

Materials and supplies $17,600

Administrative expenses

Wages and salaries $135,900

Other administrative expenses $51,700

Depreciation expenses (30% × $65,000) $19,500

Income from operations $99,000

Other Revenues and Gains

Rental revenue  $29,000

Other Expenses and Losses

Less: Interest expense $18,000

Income before income tax $110,000

Less: Income tax $37,400

Net income $72,600

Earnings per share ($72,600 ÷ 20,000)           $3.63