The following is a partial trial balance for General Lighting Corporation as of December 31, 2021: Account Title Debits Credits
Sales revenue 3,100,000
Interest revenue 95,000
Loss on sale of investments 30,000
Cost of goods sold 1,340,000
Loss on inventory write-down (obsolescence) 350,000
Selling expense 450,000
General and administrative expense 225,000
Interest expense 94,000
There were 300,000 shares of common stock outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25%.
Required:
1. Prepare a single-step income statement for 2021, including EPS disclosures.
2. Prepare a multiple-step income statement for 2021, including EPS disclosures.

1. single-step income statement for 2021

Sales revenue                                                                             3,100,000

Less Cost of goods sold                                                           (1,340,000)

Gross Profit                                                                                 1,760,000

Less Expenses :

Loss on inventory write-down (obsolescence)    350,000

Selling expense                                                      450,000

General and administrative expense                    225,000  

Interest revenue                                                      (95,000)

Loss on sale of investments                                    30,000

Interest expense                                                       94,000   (1,054,000)

Net Income before tax                                                                 706,000

Income tax expense                                                                    (176,500)

Net Income after tax                                                                    529,500

Earnings per share (EPS)                                                                   $1.77

2. multiple-step income statement for 2021

Sales revenue                                                                             3,100,000

Less Cost of goods sold                                                           (1,340,000)

Gross Profit                                                                                 1,760,000

Less Operating Expenses :

Loss on inventory write-down (obsolescence)    350,000

Selling expense                                                      450,000

General and administrative expense                    225,000   (1,025,000)

Operating Income                                                                        735,000

Less Non-Operating Expenses :

Interest revenue                                                      (95,000)

Loss on sale of investments                                    30,000

Interest expense                                                       94,000       (29,000)

Net Income before tax                                                                 706,000

Income tax expense                                                                    (176,500)

Net Income after tax                                                                    529,500

Earnings per share (EPS)                                                                  $1.77

Explanation:

The difference in these Income statements is that, the Multi-step statement clearly shows income derived from Primary Activities (Operating) whist the Single step statement does not.

Additional Notes :

Earnings per share (EPS) = Earnings Attributable to holders of common stock ÷ Weighted Average Number of Common Stocks

Therefore,

Earnings per share (EPS) = $529,500 ÷ 300,000

                                = $1.77