The following incorrect income statement was prepared by the accountant of the Axel Corporation: AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains:
Sales revenue $ 592,000
Interest revenue 32,000
Gain on sale of investments 86,000
Total revenues and gains 710,000
Expenses and losses:
Cost of goods sold $ 325,000
Selling expense 67,000
Administrative expense 87,000
Interest expense 16,000
Restructuring costs 55,000
Income tax expense 40,000
Total expenses and losses 590,000
Net Income $ 120,000
Earnings per share $ 1.20
Required: Prepare a multiple-step income statement for 2021 applying generally accepted accounting principles. The income tax rate is 25%. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)

AXEL CORPORATION

Income Statement

For the Year Ended December 31, 2021:

Sales revenue                              $ 592,000

Cost of goods sold                         (325,000 )

Gross profit                                  $ 267,000

Operating Expenses:

Selling expense              67,000

Administrative expense 87,000     (154,000)

Operating Profit                             $113,000

Interest revenue                               32,000

Gain on sale of investments            86,000

Profit before Interest expense    $231,000

Interest expense                             (16,000)

Restructuring costs                        (55,000)

Profit before tax                           $160,000

Income tax expense                      (40,000 )

Net Income                                 $ 120,000

Earnings per share                          $ 1.20

Explanation:

a) Data and Calculations:

AXEL CORPORATION Income Statement For the Year Ended December 31, 2021 Revenues and gains:

Sales revenue $ 592,000

Interest revenue 32,000

Gain on sale of investments 86,000

Total revenues and gains 710,000

Expenses and losses:

Cost of goods sold $ 325,000

Selling expense 67,000

Administrative expense 87,000

Interest expense 16,000

Restructuring costs 55,000

Income tax expense 40,000

Total expenses and losses 590,000

Net Income $ 120,000

Earnings per share $ 1.20

b) Axel Corporation's Income Statement is a financial statement that shows the profitability of the corporation.  It reveals how the corporation is able to convert the costs it incurred in the business into profitability for the stockholders.  It is one of the key financial statements, whose result (called the bottom-line or net income or loss) is carried forward to the next accounting period.

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