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26 November, 05:23

Income statement format; single step and multiple step [LO4-1, 4-3, 4-5] The following is a partial trial balance for General Lighting Corporation as of December 31, 2021: Account Title Debits Credits Sales revenue 3,350,000 Interest revenue 100,000 Loss on sale of investments 32,500 Cost of goods sold 1,390,000 Loss on inventory write-down (obsolescence) 400,000 Selling expense 500,000 General and administrative expense 250,000 Interest expense 99,000 There were 300,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%. Required Prepare a single-step income statement for 2018, including EPS disclosures

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  1. 26 November, 05:27
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    Net income = $583,875

    Earning Per Share (EPS) = $1.95 per share.

    Explanation:

    A single step income statement can be described as a financial statement that do not break revenues and expenses into there respective different categories, but only use one column each for revenue and expenses.

    For this question, a single-step income statement for 2021 can be prepared as follows:

    Note: Year 2021 is used as the correct year since it is metioned twice in the question against 2018 that was erroneously mentioned once.

    General Lighting Corporation

    Income Statement for December 31, 2021

    Details $

    Revenues:

    Sales revenue 3,350,000

    Interest revenue 100,000

    Total revenue (A) 3,450,000

    Expenses:

    Cost of goods sold 1,390,000

    Selling expense 500,000

    General and administrative expense 250,000

    Interest expense 99,000

    Loss on sale of investments 32,500

    Loss on inventory write-down (obsol.) 400,000

    Total expenses (B) 2,671,500

    Income before tax (A - B) 778,500

    Tax (25% * $778,500) (194,625)

    Net income 583,875

    EPS (583,875 / 300,000) 1.95
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