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Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting...

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Accounting

Two accountants for the firm of Elwes and Wright are arguingabout the merits of presenting an income statement in amultiple-step versus a single-step format. The discussion involvesthe following 2017 information related to Carla Company ($000omitted).

Administrative expense
    Officers' salaries$4,990
    Depreciation of office furniture andequipment4,050
Cost of goods sold60,660
Rent revenue17,320
Selling expense
    Delivery expense2,780
    Sales commissions8,070
    Depreciation of sales equipment6,570
Sales revenue96,590
Income tax9,160
Interest expense1,950


Common shares outstanding for 2017 total 40,550 (000 omitted).

Prepare an income statement for the year 2017 using themultiple-step form. (Round earnings per share to 2decimal places, e.g. 1.48.)

Answer & Explanation Solved by verified expert
3.9 Ratings (596 Votes)

CARLA COMPANY
Income Statment
For the Year Ended December 31, 2017
(In thousands, except earnings per share
Sales Revenue $96,590
Cost of Goods Sold $60,660
Gross Profit / (Loss)       [Net Sales - Cost of Goods Sold] $35,930
Operating Expenses:
Selling Expenses
Delivery Expense $2,780
Sales Commission $8,070
Depreciation Expense $6,570
Total Selling Expenses $17,420
Administrative Expenses
Salaries and Wages Expenses $4,990
Depreciation Expense $4,050
Total Administrative Expenses $9,040
$26,460
Income From Operations     [$35,930 - $9,470] $9,470
Other Revenue and Gains
Rent Revenue $17,320
$26,790
Other Expenses and Gains
Interest Expense $1,950
Income Before Income Tax $24,840
Income Tax Expense    $9,160
Net Income / (Loss) $15,680
Earnings Per Share        [$15,680 / 40,550 shares] $0.39

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