Income Statement data: Advertising expense$ 150,000 Cost of merchandise sold3,70
ID: 2426590 • Letter: I
Question
Income Statement data:
Advertising expense$ 150,000
Cost of merchandise sold3,700,000
Delivery expense30,000
Depreciation expense-office buildings and equipment30,000
Depreciation expense-store buildings and equipment100,000
Dividend revenue4,500
Gain on sale of investments4,980
Income from Pinkberry Co. investment76,800
Income tax expense140,500
Interest expense21,000
Interest revenue2,720
Miscellaneous administrative expense7,500
Miscellaneous selling expense14,000
Office rent expense50,000
Office salaries expense170,000
Office supplies expense10,000
Sales5,254,000
Sales commissions185,000
Sales salaries expense385,000
Store supplies expense21,000
QUESTION: Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were $100,000. (Round earnings per share to the nearest cent.) • Refer to the Chart of Accounts for exact wording of account titles. • Refer to the Labels and Amount Descriptions for exact wording of text entries.
CHART OF ACCOUNTS Equinox Products Inc. General Ledger ASSETS 110 Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 131 Merchandise Inventory 132 Interest Receivable 133 Prepaid Expenses 141 Investments-Solstice Corp. 142 Investment in Pinkberry Co. Stock 143 Investment in Dream Inc. Bonds 144 Valuation Allowance for Available-for-Sale Investments 181 Store Buildings and Equipment 182 Accumulated Depreciation-Store Buildings and Equipment 183 Office Buildings and Equipment 184 Accumulated Depreciation-Office Buildings and Equipment 191 Goodwill LIABILITIES 211 Accounts Payable 221 Income Tax Payable 225 Cash Dividends Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Preferred Stock 312 Paid-in Capital in Excess of Par-Preferred Stock 321 Common Stock 322 Paid-in Capital in Excess of Par-Common Stock 331 Retained Earnings 341 Cash Dividends 351 Treasury Stock 352 Paid-in Capital from Sale of Treasury Stock 361 Unrealized Gain (Loss) on Available-for-Sale InvestmentsExplanation / Answer
Equinox Products Inc. Income statement For the year ended on December 31, 2016 Sales $ 52,54,000 Less: Cost of merchandise sold $ 37,00,000 Gross Income $ 15,54,000 Less: Operating Expenses Selling Expenses Delivery expense $ 30,000 Advertising expense $ 1,50,000 Miscellaneous selling expense $ 14,000 Sales commissions $ 1,85,000 Sales salaries expense $ 3,85,000 $ 7,64,000 Administrative expenses Depreciation expense-office buildings and equipment $ 30,000 Miscellaneous administrative expense $ 7,500 Office rent expense $ 50,000 Office salaries expense $ 1,70,000 Office supplies expense $ 10,000 $ 2,67,500 Other Depreciation expense-store buildings and equipment $ 1,00,000 Store supplies expense $ 21,000 $ 1,21,000 $ 11,52,500 Income from operations $ 4,01,500 Other revenues and gains Dividend revenue $ 4,500 Gain on sale of investments $ 4,980 Income from Pinkberry Co. investment $ 76,800 Interest revenue $ 2,720 $ 89,000 Interest expense $ 21,000 Net income from other sources $ 68,000 Net Income Before Tax expense $ 4,69,500 Less: Income Tax Expense $ 1,40,500 Net Income $ 3,29,000 Less: Preferred dividends $ 1,00,000 Income availbale for common shareholders (a) $ 2,29,000 Number of common shares outstanding (b) 100000 Earning per share (a/b) $ 2.29