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Chapter 4: Question 3BE (page 181)

Using the information provided in BE4-2, prepare a condensed multiple-step income statement for Brisky Corporation

Short Answer

Expert verified

The net income for the company is $310,800.

Step by step solution

01

Meaning of multiple-step income statement

This is a type of statement that a company uses to provide a clearer picture of income generated from the business operations for both operating and non-operating sections.

02

Preparing multiple-step income statement for Brisky Corporation

Brisky Corporation
Income Statement
For the Year Ended December 31, 2017

Net Sales

$2,400,000

Cost of Goods Sold

$1,450,000

Gross Profits

$950,000

Less: Expenses

Selling Expenses

$280,000

Administrative Expenses

$212,000

Total Expenses

$492,000

Income From Operations

$458,000

Other Revenue and Gains

Interest Revenue

$31,000

Other Expenses and Losses

Interest Expense

$45,000

Interest before Income Tax

$444,000

Income Tax Expense

$133,200

Net Income

$ 310,800

Earnings per share

$4.44

Working Note

  1. Calculation of Earnings per share

Earningpershare=NetincomeOutstandingcommonstock=$310,80070,000Shares=$4.44

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Most popular questions from this chapter

Perlman Land Development, Inc. purchased land for \(70,000 and spent \)30,000 developing it. It then sold the land for \(160,000. Sheehan Manufacturing purchased land for a future plant site for \)100,000. Due to a change in plans, Sheehan later sold the land for \(160,000. Should these two companies report the land sales, both at gains of \)60,000, in a similar manner?

The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to P&G’s financial statements and the accompanying notes to answer the following questions.

(a) What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.

(b) What are P&G’s primary revenue sources?

(c) Compute P&G’s gross profit for each of the years 2012–2014. Explain why gross profit decreased in 2014.

(d) Why does P&G make a distinction between operating and nonoperating revenue?

(e) What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2009–2014?

What is earnings management?

Question: What is meant by the terms elements and items as they relate to the income statement? Why might items have to be disclosed in the income statement?

Which of the following statements is correct regarding income reporting under IFRS?

(a) IFRS does not permit revaluation of property, plant, equipment, and intangible assets.

(b) IFRS provides the same options for reporting comprehensive income as GAAP.

(c) Companies must classify expenses by nature.

(d) IFRS provides a definition for all items presented in the income statement.
See all solutions

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