Prepare a single-step income statement for the year ended December 31, 2012. Inc

Question

Prepare a single-step income statement for the year ended December 31, 2012. Include earnings
per share for earnings before extraordinary items and net income.

Prepare a multiple-step income statement. Include earnings per share for earnings before extraordinary
items and net income.

Barbie Inc. Information ending Dec 31, 2012, assume 40% corporate tax rate on all items including casualty losses

Sales $670,000.00 Rental income $3,600.00 Gain on the sale of fixed assets $3,000.00 General and administrative expenses $110,000.00 Selling expenses $97,000.00 Interest expense $1,900.00 Depreciation for the period $10,000.00 Extraordinary item (casualty loss—pretax) $30,000.00 Cost of sales $300,000.00 Common stock (30,000 shares outstanding) $150,000.00

Explanation / Answer

Please note that we have accounted rental income as non-operating item.

Single step:

Please note that we have accounted rental income as non-operating item.

Single step:

Sales 670,000 Less : cost of sales 300,000 Less: Selling expenses 97,000 Less: General and adminsitarive expenses 110,000 Less: depreciation 10,000 Add: rental income 3,600 Add: gain on sale of assets 3,000 Less: Interest expenses 1,900 Net income before extraordinary loss 157,700 Less: Extraordinay loss 30,000 Net income before taxes 127,700 Less Taxes 51,080 Net income 76,620 Shares 30,000 Earnings per share before extraordinary loss 5.26 Earnings per share 2.55

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