9BP Prepare an income statement for ... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 9BP (page 49)

Prepare an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share.
Sales
1,360,000
Shares outstanding
104,000
Cost of goods sold
700,000
Interest expenses
34,000
Selling and administration expenses
49,000
Depreciation expenses
23,000
Preferred stock dividend
86,000
Taxes
100,000

Short Answer

Expert verified

The earning per share is $3.54.

Step by step solution

Indirect expense

Indirect expense means the expense incurred by the company that is not directly related to the production of the goods. It includes the personnel cost, electricity expense, etc.

Income statement for Virginia Slim Wear

Particulars	Amount ($)
Sales	1,360,000
Less: Cost of goods sold	700,000
Gross profit	660,000
Less: Selling and administrative expenses	49,000
Less: Depreciation expenses	23,000
Less: Interest expenses	34,000
Operating income	554,000
Less:Taxes	100,000
Net income after tax	454,000
Less: Preferred stock dividend	86,000
Income available for shareholders	368,000
No. of shares outstanding	104,000
Earnings per share	3.54

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	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910

	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910

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Short Answer

Step by step solution

Indirect expense

Income statement for Virginia Slim Wear

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Sales	1,360,000
Shares outstanding	104,000
Cost of goods sold	700,000
Interest expenses	34,000
Selling and administration expenses	49,000
Depreciation expenses	23,000
Preferred stock dividend	86,000
Taxes	100,000