The accountant of Latifa Shoe Co. has compiled the following information from th

Question

The accountant of Latifa Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2017.

There were 20,000 shares of common stock outstanding during the year.

a) prepare a multiple-step income statement

b) prepare a single-step income statement

Rent revenue $29,000 Interest expense 18,000 Market appreciation on land above cost 31,000 Salaries and wages expense (selling) 114,800 Supplies expense (selling) 17,600 Income tax 37,400 Salaries and wages expense (administrative) 135,900 Other administrative expenses 51,700 Cost of goods sold 496,000 Net sales 980,000 Depreciation on plant assets (70% selling, 30% administrative) 65,000 Cash dividends declared 16,000

Explanation / Answer

a)

b)

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Latifa Shoe Co. multi Income Statement For the year ended December 31, 2017 Sales Revenue Net Sales   $ 980,000 Cost of goods sold $ 496,000 Gross Profit $ 484,000 Operating Expenses Administrative expenses Salaries and wages expenses (Administrative) $ 135,900 Other administrative expenses $    51,700 Depreciation on Plant assets ($65,000*30%) $    19,500 Total administrative expenses $ 207,100 Selling expenses Salaries and wages expenses (Selling) $ 114,800 Supplies expenses (Selling) $    17,600 Depreciation on Plant assets ($65,000*70%) $    45,500 Total selling expenses $ 177,900 Total Operating expenses $ 385,000 Income from operations $    99,000 Non operating income and (expenses) Interest expense $ (18,000) Rent revenue $    29,000 Market appreciation on land above cost $    31,000 Total Non operating income and expenses $    42,000 Income before income taxes $ 141,000 Income taxes $    37,400 Net Income $ 103,600 Earning per common share ($171,800/20,000) $         5.18

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