Question

Romney's Marketing Company has the following adjusted trial balance at the end of the current year. No dividends were declared. However, 540 shares ($0.10 par value per share) issued at the end of the year for $3,000 are included below:
Debit Credit
Cash $ 1,570
Accounts receivable 2,220
Interest receivable 270
Prepaid insurance 1,710
Notes receivable (long-term) 2,880
Equipment 15,500
Accumulated depreciation $ 2,970
Accounts payable 2,230
Accrued expenses payable 3,740
Income taxes payable 2,650
Unearned rent revenue 330
Common Stock (820 shares) 82
Additional paid-in capital 3,508
Retained earnings 5,080
Sales revenue 37,250
Interest revenue 160
Rent revenue 560
Wages expense 19,000
Depreciation expense 1,750
Utilities expense 320
Insurance expense 780
Rent expense 9,800
Income tax expense 2,760
Total $58,560 $58,560
Prepare a multi-step income statement in good form for the current year. Include earnings per share. (Round your earnings per share to 2 decimal places.)

Answer 1

Answer:

Romney's Marketing Company

Multi-step income statement

Sales revenue                                                        37,250

Less Operating Expenses :

Administrative Expenses

Wages expense                                   19,000

Depreciation expense                           1,750

Utilities expense                                      320

Insurance expense                                  780

Rent expense                                        9,800     (31,650)

Operating Income / (Loss)                                     5,600

Less Non Operating Expenses

Rent revenue                                         (560)

Interest revenue                                     (160)

Income tax expense                             2,760     (2,040)

Net Income / (Loss)                                               3,560

Earnings per share                                                $4.34

Explanation:

A multi-step income statement, shows separately, income derived from Primary Activities of the Company (in this case marketing) and income which also includes secondary activities (Net Income).

Earnings per Share = Earnings Attributable to Holders of Common Stock ÷ Weighted Average Number of Common Stockholders.

                                = $3,560 ÷ 820 shares

                                = $4.34 (2 decimal places.)