The following is a partial trial balance for the Green Star Corporation as of December 31, 2021: Account Title Debits Credits
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investments 55,000
Cost of goods sold 740,000
Selling expenses 185,000
General and administrative expenses 80,000
Interest expense 45,000
Income tax expense 135,000
There were 100,000 shares of common stock outstanding throughout 2021.
Required:
Prepare a single-step income statement for 2021, including EPS disclosures.
Prepare a multiple-step income statement for 2021, including EPS disclosures.

Answer and Explanation:

The presentation of the income statement is presented below:

Income statement

Revenues and gains:  

Sales revenue          1,400,000

Add: Interest revenue       35,000

Add: Gain on sale of investment    55,000

Total revenues and gains      1,490,000

Less:

Expenses and losses:  

Cost of goods sold    740,000  

General and administrative expenses80,000  

Selling expenses   185,000  

Interest expense    45,000  

Total expenses and losses     1,050,000

Income before income tax       440,000

Income tax expense     - 135,000

Net income    305,000

EPS = Net income ÷ Number of common shares

                  ($305,000 ÷ 100,000)  3.05

2.

Income statement

Sales            1,400,000

Less: Cost of goods sold - $740,000

Gross profit      660,000

Less:

Operating expenses:  

General and administrative expenses$80,000  

Selling expenses $185,000  

Total operating expenses  -$265,000

Operating income $395,000

Other incomes and expenses  

Interest revenue  $35,000  

Gain on sale of investment $55,000  

Interest expense  -$45,000  

Total other income, net  $45,000

Less: Income before income tax $440,000

Income tax expense -$135,000

Net income $305,000

EPS = Net income ÷ Number of common shares

(305,000 ÷ 100,000)  3.05

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