The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION Income Statement For the Year Ended December 31, 2018 Revenues and gains: Sales $592,000 Interest and dividends 32,000 Gain on sale of investments 86,000 Total revenues and gains 710,000 Expenses and losses: Cost of goods sold$325,000 Selling expenses 67,000 Administrative expenses 87,000 Interest 26,000 Restructuring costs 55,000 Income taxes 60,000 Total expenses and losses 620,000 Net Income $90,000 Earnings per share $0.90 Required: Prepare a multiple-step income statement for 2018 applying generally accepted accounting principles. The income tax rate is 40%.

$90,000

Explanation:

AXEL CORPORATION

Income Statement For the Year Ended December 31, 2018

Sales revenue $ 592,000

Less:Cost of goods sold 325,000

Gross profit 267,000

Operating expenses:

Selling $67,000

Administrative 87,000

Restructuring costs 55,000

Total operating expenses 209,000

Operating income (267,000-209,000) 58,000

Other income (expense):

Interest and dividends 32,000

Interest expense(26,000)

Gain on sale of investments 86,000

Income before income taxes (86,000+32,000+58,000-26,000) 150,000

Income tax expense [40% x $150,000]60,000

Net income(150,000-60,000) 90,000

Earnings per share [90$/100$=0.9]$ 0.90

Numbers of share outstanding 90,000/0.9 =$100,000

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