Sunland Corporation had net sales of $2,427,500 and interest revenue of $40,000 during 2020. Expenses for 2020 were cost of goods sold $1,465,500, administrative expenses $220,600, selling expenses $289,300, and interest expense $47,900. Sunland’s tax rate is 30%. The corporation had 103,100 shares of common stock authorized and 71,990 shares issued and outstanding during 2020. Prepare a condensed multiple-step income statement for Sunland Corporation. (Round earnings per share to 2 decimal places, e. g. 1.48.)

Answer and Explanation:

The preparation of the condensed multiple-step income statement is presented below:

Net sales                       $2,427,500

Less: Cost of goods sold -$1,465,500

Gross profit                    $962,000

Less:

Selling expenses            $289,300

Administrative expenses $220,600  ($509,900)

Income from operations  $452,100

Other revenue and gains  

Interest revenue             $40,000

Other expenses and losses  

Interest expense     $47,900($7,900)

Income before income tax   $444,200

Income tax expense(30%)  ($133,260)

Net income  $310,940

Earnings per share($310,960 ÷ 71,990 shares)  $4.32

(a) when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

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