Earnings per Share and Multiple-Step Income Statement The following summarized d

Question

Earnings per Share and Multiple-Step Income Statement
The following summarized data relate to Bowden Corporation's current operations:

Required
Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement.

Sales revenue $968,500 Cost of goods sold 585,000 Selling expenses 75,400 Administrative expenses 93,600 Loss on sale of equipment 6,500 Income tax expense 62,400 Shares of common stock Outstanding at January 1 15,000 shares Additional issued at May 1 9,100 shares Additional issued at November 1 2,600 shares

Explanation / Answer

Multiple-step income statement for Bowden Corporation for the year

BOWDEN CORPORATION

Income Statement

For the Year Ended December 31

Sales Revenue

968,500

Cost of Goods Sold      

585,000

Gross Profit on Sales    

383,500

Selling Expenses

75,400

Administrative Expenses       

93,600

169,000

Operating Income

214,500

Loss on Sale of Equipment    

6,500

Income before Taxes     

208,000

Income Tax Expense    

62,400

Net Income

145,600

Weighted Average number of common stock shares*

21,500 Shares

Earnings per share of Common Stock       

$6.77 per share

Weighted Average number of common stock shares*

= 15,000 + [9,100 x8/12] + [2,600 x2/12]

= 15,000 + 6,067 + 433

= 21,500 Shares

BOWDEN CORPORATION

Income Statement

For the Year Ended December 31

Sales Revenue

968,500

Cost of Goods Sold      

585,000

Gross Profit on Sales    

383,500

Selling Expenses

75,400

Administrative Expenses       

93,600

169,000

Operating Income

214,500

Loss on Sale of Equipment    

6,500

Income before Taxes     

208,000

Income Tax Expense    

62,400

Net Income

145,600

Weighted Average number of common stock shares*

21,500 Shares

Earnings per share of Common Stock       

$6.77 per share

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