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 are related to Garner Corporations operations Sales revenue Cost of goods sold Selling expenses Administrative expenses Loss from plant strike Income tax expense Shares of common stock Outstanding at January 2,216,000 1,290,000 180,000 142,800 95,000 204,000 65,000 shares 17,000 shares 3,000 shares Additional issued at April 1 Additional issued at August 1 Required Prepare a multiple-step income statement for Garner Corporation. Include earnings per share disclosure at the bottom of the income statement. Garner Corporation has no preferred stock GARNER CORPORATION Income Statement For the Year End Sales Revenue s 2,216,00 v

Explanation / Answer

In the above table EPS = $3.85 (2 decimal places) or $4 (rounded off to nearest $)

EPS = net income/weighted average of shares outstanding.

Computation of weighted average shares:

Thus EPS = 304200/79000

EPS = $3.85 (2 decimal places) or $4 (rounded off to nearest $)

Sales revenue 2,216,000 Cost of goods sold 1,290,000 Gross profit on sales 926,000 Selling expenses 180,000 Administrative expenses 142,800 322,800 Operating income 603,200 loss from plant strike 95,000 Income before taxes 508,200 Income tax expense 204,000 Net income 304,200 Earnings per share of common stock 3.85

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