Summary Business Accounting

Question:

[This is a variation of the previous problem focusing on income statement presentation.]

Required:

Refer to the information presented in Problem 4–4. Prepare a revised income statement for 2013

reflecting the additional facts. Use a multiple-step format. Assume that an income tax rate of 40% applies

to all income statement items, and that 20 million shares of common stock were outstanding throughout

the year.



Answer:



ALEXIAN SYSTEMS, INC.

Income Statement

For the Year Ended December 31, 2013



($ in millions except per share date)

Net sales revenue ..................................................................... $425

Cost of goods sold ................................................................... [1] 265

Gross profit ............................................................................. 160



Operating expenses:

Selling and administrative .................................................... [2] $128

Restructuring costs ............................................................... 26

Total operating expenses ................................................... 154

Operating income .................................................................... 6