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Chapter 13: Q50PGB (page 723)

Preparing an income statement

The following information was taken from the records of Arizona Motorsports, Inc. at November 30, 2018:

Learning Objectives 3, 4

1. Nov. 8 Treasury Stock \(36,000

Learning Objective 5

Net Income \)37,840

Selling Expenses

Administrative Expenses

Income from Discontinued Operations

Cost of Goods Sold

Treasury Stock鈥擟ommon (1,500 shares)

Net Sales Revenue

\( 95,000

150,000

2,400

470,000

19,500

801,400

Common Stock, \)11 Par Value, 13,500

shares authorized and issued \( 148,500

Preferred Stock, \)2 No-Par Value, 2,000

shares issued 60,000

Income Tax Expense: Continuing

Operations 50,000

Income Tax Expense: Income from

Discontinued Operations 960

Prepare a multi-step income statement for Arizona Motorsports for the fiscal year ended November 30, 2018. Include earnings per share

Short Answer

Expert verified

A multi-step income statement for the fiscal year ended November 30, 2018, shows net income $65,500 and earnings per share is $2.82.

Step by step solution

01

Basic Introduction-

Income from Discontinued Operations less applicable tax ($2,400- $960)

Preferred stock (2,000 shares * $2)

No of equity shares issued and outstanding (13,500- 1,500)

02

Multi-step income statement-

Income Statement
November 30, 2018

Net Sales Revenue

$801,400

Cost of goods sold

$470,000

Gross Profit

$331,400

Less: Operating Expenses-

Selling Expenses

($95,000)

Administrative Expenses

($150,000)

Operating Income

$86,400

Less: Income Tax Expense: Continuing Operations

($50,000)

Income from Continuing Operations

$36,400

Income from Discontinued Operations less applicable tax

$1,440

Net Income

$37,840

Less: Preferred dividend (4,000 * $2)

($4,000)

  1. Earnings available

$33,840

  1. No of equity shares issued and outstanding (13,500 -1,500)

12,000

Earnings per share (a/b)

$2.82

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Most popular questions from this chapter

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