Use this information to answer the following questions: The trial balance of Lakewood Inc. included the following accounts as of December 31, 2021: Debits Credits 1,800,000 80,000 50,000 Sales revenue Interest revenue Gain on sale of investments Cost of goods sold Selling expense Loss on inventory write-down Interest expense General and administrative expense 1,100,000 220,000 30,000 40,000 200,000 Lakewood Inc. had 100,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 25%. Required: Prepare a multiple-step income statement with earnings per share disclosure

Answer and Explanation:

The preparation of the multiple step income statement is shown below:

Sales revenue $1,800,000

Less: Cost of goods sold -$1,100,000

Gross profit $700,000

Less: Operating expenses :  

Selling expense -$220,000

General and administrative expense -$200,000

Operating profit $280,000

Other revenues :  

Interest revenue $80,000

gain on sale of investment $50,000

Other expenses and losses  

Interest expense -$40,000

Loss on inventory write-down -$30,000

Profit before tax $340,000

Income tax -$85,000

Net income $255,000

Earning per share (Net income ÷ Number of common shares)(255,000 ÷ 100,000)$2.55

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