The preliminary 2016 income statement of alexian system inc is presented below A
ID: 2417942 • Letter: T
Question
The preliminary 2016 income statement of alexian system inc is presented below
Alexian system inc
Income statement
For the year ended dec 31 2016
($ in millions, except earings per share)
Revenue and gains 425
Net sales 3
Other income 126
Total revenue and sales 554
Expenses
Cogs 270
Selling and administrative 154
Income e taxes 52
Total expenses 476
Net income 78
Earning per share 3.90
Additional information
1. Selling and administrative expense include 26 million in restricting costs
2. Included in other income is 120 million in income from discontinued operation. This consists of 90 million in operating income and a 30 million gain on disposal. The remaining 6 million is from the gain on sale of investments
3. Cost of goods sold was increased by 5 million to correct an error in the calculation of 2015s ending inventory. The amount is material.
Required:
Prepare a revised income statement for 2016 reflecting the additionoal facts. Use a multiple step format. Assume that an income tax rate of 40% applies to all income statement items, and that 20 million shares of common stock were outstanding throughout the year.
Explanation / Answer
Revised Income Statement for 2016 -
Particulars Amt. in million $
Revenues and gains 425
Net sales 3
Other income (126 - 120) 6
Total revenues and sales (A) 434
COGS (270 + 5) 275
Selling and administrative (154 - 26) 128
Income tax 40% 12
Total expenses (B) 415
Net Income A - B 19
Earning per share ($19 million / 20 million) $0.95
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