Question

The financial records of Coronado Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept certain statistical data related to the income statement as follows.

1.		The beginning merchandise inventory was $117,760 and decreased 20% during the current year.
2.		Sales discounts amount to $14,280.
3.		21,772 shares of common stock were outstanding for the entire year.
4.		Interest expense was $18,000.
5.		The income tax rate is 30%.
6.		Cost of goods sold amounts to $500,000.
7.		Administrative expenses are 20% of cost of goods sold but only 8% of gross sales.
8.		Four-fifths of the operating expenses relate to sales activities.

From the foregoing information prepare an income statement for the year 2020 in single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

CORONADO INC. Income Statement For the Year Ended December 31, 2020 Revenues Net Sales tA Expenses Cost of Goods Sold $ 500000 i Selling Expenses Interest Expense 18000 i Administrative Expenses 100000 i Total Expenses Income Before Income Tax Income Tax Expense Net Income /(Loss) $ Earnings Per Share $ $

Answer 1

Income Statement
For the year ended December 31,2020
Revenues
Net sales		1235720
Expenses
Cost of goods sold	500000
Selling expenses	400000
Interest expense	18000
Administrative expenses	100000		=500000*20%
Total expenses		1018000
Income before income tax		217720
Income tax expense		65316	=217720*30%
Net income /(loss)		152404
Earnings per share		7.00	=152404/21772

Workings:
Gross sales	1250000	=100000/8%
Less: Sales discount	14280
Net sales	1235720
Total operating expenses	500000	=100000*5/1
Selling expenses	400000	=500000*4/5