The following incorrect income statement was prepared by the accountant of the A
ID: 2475114 • Letter: T
Question
The following incorrect income statement was prepared by the accountant of the Axel Corporation:
Prepare a multiple-step income statement for 2016 applying generally accepted accounting principles. The income tax rate is 40%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)
AXEL CORPORATIONIncome Statement
For the Year Ended December 31, 2016 Revenues and gains: Sales $ 710,000 Interest and dividends 44,000 Gain on sale of investments 91,000 Total revenues and gains 845,000 Expenses and losses: Cost of goods sold $ 385,000 Selling expenses 71,000 Administrative expenses 91,000 Interest 38,000 Restructuring costs 67,000 Income taxes 77,200 Total expenses and losses 729,200 Net Income $ 115,800 Earnings per share $ 1.16
Explanation / Answer
AXEL CORPORATION
Income Statement
For the Year Ended December 31, 2016
Sales Revenue
7,10,000
Less: Cost of goods sold
(3,85,000)
Gross Profit
3,25,000
Operating Exp
Selling expenses
71,000
Administrative exp
91,000
(1,62,000)
Total Operating exp
Operating Income
-
Non Operating &Others
Interest and dividends
44,000
Gain on sale of investment
91,000
Interest
(38,000)
Restructuring cost
(67,000)
30,000
1,93,000
Income before Tax
Income Tax @ 40%
77,200
Net Income
1,15,800
EPS 1.16
Sales Revenue
7,10,000
Less: Cost of goods sold
(3,85,000)
Gross Profit
3,25,000
Operating Exp
Selling expenses
71,000
Administrative exp
91,000
(1,62,000)
Total Operating exp
Operating Income
-
Non Operating &Others
Interest and dividends
44,000
Gain on sale of investment
91,000
Interest
(38,000)
Restructuring cost
(67,000)
30,000
1,93,000
Income before Tax
Income Tax @ 40%
77,200
Net Income
1,15,800
EPS 1.16
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