Problem 126 Shown below is an income statement for 2014 that was prepared by a p
ID: 2487633 • Letter: P
Question
Problem 126 Shown below is an income statement for 2014 that was prepared by a poorly trained bookkeeper of Howell Corporation Howell Corporation INCOME STATEMENT December 31, 2014 901,580 Sales revenue Investment revenue Cost of goods sold Selling expenses Administrative expenses Interest expense Income before special items Special items 19,990 (409,740) (146,900) (195,610) 13,340 155,980 Loss on disposal of a component of the business Major casualty loss (extraordinary item) Net federal income tax liability Net income (30,340) (50,010) (22,689) $52,941 Prepare a multiple-step income statement for 2014 for Howell Corporation that is presented in accordance with generally accepted accounting principles (including format and terminology). Howell Corporation has 50,000 shares of common stock outstanding and has a 30% federal income tax rate on all tax related items. (Round per share values to 2 decimal places, eg, $2.50.)Explanation / Answer
HOWELL CORPORATION
Income Statement
December 31, 2014
Sales Revenue 901580 Less Cost of goods sold 409740 Gross Profit 491840 Less Administrative exp 195610 Less Selling Exp 146900 Less Interest exp 13340 Operating profit 135990 Add: Non-operating income: Investment reveue 19990 Less Non-operating exp: Loss on disposal of components of busines 30340 Major casuality loss 50010 Net profits 75630 Less net federal tax liability 22689 Net income 52941