The trial balance of Kroeger Inc. included the following accounts as of December 31, 2016: ...

Question:

The trial balance of Kroeger Inc. included the following accounts as of December 31, 2016:

Debit Credits
Sales revenue 8,250,000
Interest revenue 65,000
Gain on sale of investments 125,000
Unrealized gains on investments 142,500
Foreign currency translation losses 165,000
Cost of goods sold 6,050,000
Selling expenses 650,000
Goodwill impairment loss 475,000
Interest expense 35,000
General and administrative expenses 550,000

Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 40%.

Required: Prepare a 2016 multiple-step income statement for Kroeger Inc. with earnings per share disclosure. Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.

Earnings Per Share:

It is value or amount earned by the company and individual on a single share of the organization. The earning per share is calculated with the help on the number of shares and profit after tax. For calculating the number of shares, the company used a weighted average for finding the accurate number of shares.

Answer and Explanation:

Multiple step income statement:

Particular Amount
Sales revenue 8250000
Less: cost of Goods sold (6050000)
Gross profit 2200000
Add: Selling expenses 650000
Add: General and administrative expenses 550000
Less: Interest expense (35000)
Add: Interest revenue 65000
Add: Gain on sale of investments 125000
Profit Before Income tax 3555000
Less: Income tax expenses (1422000)
Profit after tax 2133000

Calculation for earning per share:

{eq}\begin{align*} & = \dfrac{{{\rm{Profit}}\;{\rm{after}}\;{\rm{tax}}}}{{{\rm{Number}}\;{\rm{of}}\;{\rm{shares}}}}\\ & = \dfrac{{2133000}}{{300000}}\\ &= 7.11 \end{align*} {/eq}


Learn more about this topic:

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Operations of an Income Statement

from Accounting 101: Financial Accounting

Chapter 8 / Lesson 5
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