Question

The following balances were taken from the books of Crane Corp. on December 31, 2020. Interest revenue $87,000 Accumulated depreciation—equipment $41,000 Cash 52,000 Accumulated depreciation—buildings 29,000 Sales revenue 1,381,000 Notes receivable 156,000 Accounts receivable 151,000 Selling expenses 195,000 Prepaid insurance 21,000 Accounts payable 171,000 Sales returns and allowances 151,000 Bonds payable 101,000 Allowance for doubtful accounts 8,000 Administrative and general expenses 98,000 Sales discounts 46,000 Accrued liabilities 33,000 Land 101,000 Interest expense 61,000 Equipment 201,000 Notes payable 101,000 Buildings 141,000 Loss from earthquake damage 151,000 Cost of goods sold 622,000 Common stock 501,000 Retained earnings 22,000 Assume the total effective tax rate on all items is 20%. Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Answer:

Net Income 212,800

EPS: 2.128=2.13

Explanation:

The Interst and earthquake are not resutl from the main activity of the business so are calcualted as non-operating and losses.

Sales revenue                           1,381,000

Sales discounts                           (46,000)

Sales returns and allowances    (151,000)

                               Net Sales    1,184,000

                Cost of goods sold    (622,000)

                Gross Profit                 562,000

Selling expenses          (195,000)

Administrative

and general expenses   (98,000)

    Operating Income                 269,000

Non Operating Income

Interest revenue               87,000

Interest expense               61,000

Loss from

earthquake damage        (151,000)

Net Non-Operating            (3,000)

Income before taxes                 266,000

Income tax expense                   (53,200)

Net Income                                 212,800

Earning Per Share: 2.13 (212,800/100,000)