Answer:
1. Single-Step Income
Income statement
Revenues and gains: Amount$
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investment <u>55,000 </u>
Total revenues and gains 1,490,000
<u>Expenses and losses</u>
Cost of goods sold 740,000
General and administrative 80,000
expenses
Selling expenses 185,000
Interest expense <u>45,000</u>
Total expenses and losses <u>1,050,000</u>
Income before income tax 440,000
Income tax expense <u>-135,000</u>
Net income 305,000
EPS = Net income/Number of common shares
EPS = 305,000/100,000
EPS = 3.05
2. Multi-Step Income
Income statement
Particulars Amount$
Sales 1,400,000
Cost of goods sold <u>-740,000</u>
Gross profit 660,000
<u>Operating expenses</u>
General and administrative 80,000
expenses
Selling expenses <u>185,000 </u>
Total operating expenses <u>-265,000</u>
Operating income 395,000
<u>Other incomes and expenses</u>
Interest revenue 35,000
Gain on sale of investment 55,000
Interest expense -45,000
Total other income, net <u>45,000</u>
Income before income tax 440,000
Income tax expense <u>-135,000</u>
Net income <u>$305,000</u>
EPS = Net income/Number of common shares
EPS = 305,000/100,000
EPS = 3.05