Question

The accountant of Sheridan Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2020.

Rent revenue		$30,600
Interest expense		19,600
Market appreciation on land above cost		32,600
Salaries and wages expense (selling)		116,400
Supplies expense (selling)		19,200
Income tax		24,700
Salaries and wages expense (administrative)		137,500
Other administrative expenses		53,300
Cost of goods sold		497,600
Net sales		981,600
Depreciation on plant assets (70% selling, 30% administrative)		66,600
Cash dividends declared		17,600

There were 20,000 shares of common stock outstanding during the year.

Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Answer 1

Sheridan Shoe Co.
Income Statement
At December 31, 2020
Net Sales			981,600
Cost of goods sold			-497,600
Gross profit			484,000
Selling expenses:
Salaries and wages expense	116,400
Supplies expense	19,200
Depreciation on plant assets (66,600 x 70%)	46,620
Total selling expenses		182,220
Administrative and Genral expenses
Salaries and wages expense	137,500
Other administrative expenses	53,300
Depreciation on plant assets (66,600 x 30%)	19,980
Total Administrative and Genral expenses		210,780
Total operating expenses			-393,000
Operating profit			$91,000
Other revenues and expenses
Rent revenues		30,600
Interest expense		-19,600
Total other revenues and expenses			11,000
Profit before tax			$102,000
Income tax expense			-24,700
Net income			$77,300
Earning per share ( Net income/ Number of shares) (77,300/20,000)			$3.87

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