The trial balance of Rollins Inc. included the following accounts as of December 31, 2021: Debits Credits
Sales revenue 5,400,000
Interest revenue 37,500
Loss on sale of investments 10,000
Loss on debt investments 125,000
Gain on projected benefit obligation 235,000
Cost of goods sold 3,950,000
Selling expense 350,000
Restructuring costs 155,000
Interest expense 20,000
General and administrative
expense 250,000
The loss on debt investments represents a decrease in the fair value of debt securities and is classified as part of other comprehensive income. Rollins 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 2021 multiple-step income statement for Rollins Inc. with earnings per share disclosure.

Net income  = $725,625    

Earnings per share = $7.26 per share

Explanation:

The multiple-step income statement refers to an income statement that displays gross profit obtained as sales revenue minus cost of goods sold, and also shows an organization's operating revenues and operating expenses separately from its nonoperating revenues or gains and expenses or losses.

The multiple-step income statement can be prepared as follows:

Rollins Inc.

multiple-step income statement

For the Year Ended December 31, 2021

Details                                                      $                             $            

Sales Revenue                                                               5,400,000

Cost of goods sold                                                       (3,950,000)  

Gross profit                                                                     1,450,000

Operating expenses:

Selling expense                                 (350,000)

General and admin expense             (250,000)  

Total operating expenses                                              (600,000)  

Operating income                                                            850,000

Interest revenue (expense):

Interest revenue                                     37,500

Interest expense                                  (20,000)

Total Interest revenue (expense)                                      17,500

Other compreh. income (loss):

Loss on sale of investments               (10,000)

Loss on debt investments                 (125,000)

Gain on projected ben. obligation     235,000

Total other compreh. income (loss)                               100,000  

Income before tax                                                           967,500

Income taxes (w.1)                                                           (241,875)  

Net income                                                                      725,625    

Earnings per share (w.2)                                                      7.26

Workings:

w.1: Income taxes = Income before tax  * Effective tax rate = $967,500 * 25% = $241,875

w.2: Earnings per share = Net income / Number of shares of stock outstanding throughout the year = $725,625 / 100,000 = $7.26

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