Question

The following are selected items derived from Dibb Company's adjusted trial balance on December 31, 2016: Loss on sale of land $5,000 Cost of goods sold $130,000 Sales (net) $198,000 Operating expenses 45,000 Twelve thousand shares of common stock were outstanding the entire year. Required: Assuming a 30% income tax rate on all items of income, prepare a 2016 income statement for Dibb's Company using a multiple-step format. Round earnings per share computations to two decimal places. DIBB COMPANY Income Statement (Multiple-Step) For Year Ended December 31, 2016

Answer 1

Answer:

See the explanation below.

Explanation:

DIBB COMPANY

Income Statement (Multiple-Step)

For Year Ended December 31, 2016

Details                                           Amount ($)

Sales (net)                                        198,000

Cost of goods sold                        (130,000)  

Gross profit                                      68,000

Operating expenses                     (45,000)

Operating profit before tax             23,000

Tax (23,000 * 30%)                          (6,900)

Profit after tax                                    16,100

Loss on sale of land                         (5,000)

Profit for the year                              11,100  

Earning per share (11,100/12,000)      0.93                        

Answer 2

Answer:

                    Dibb Company

                Income Statement

                December 31, 2016

Revenues and gains

    Sales revenues (net)                      $198,000

         Total revenues and gains         $198,000

Expenses and losses

    Cost of goods sold                        ($130,000)

    Loss on sale of land                          ($5,000)  

         Total expenses and losses      ($135,000)

Net income before taxes                    $63,000

    Income taxes                                  ($18,900)

Net income                                           $44,100

Explanation:

A multi-step income statement uses multiple calculations to determine the company's net income, therefore, it is more detailed than single step income statements. In this case, the accounts included were really few, so the income statement is relatively simple.