Rembrandt Paint Company had the following income statement items for the year ended December 31, 2021 ($ in thousands): Sales revenue $25,000 Cost of goods sold $14,000
Interest revenue 240 Selling and administrative expense 3,200
Interest expense 440 Restructuring costs 1,500

In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $3.2 million and a gain on disposal of the component’s assets of $5.2 million. 600,000 shares of common stock were outstanding throughout 2018. Income tax expense has not yet been recorded. The income tax rate is 40% on all items of income (loss).

Required:
Prepare a multiple-step income statement for 2021, including EPS disclosures.

Net income = $4,860,000  

Earning Per Share

Income From Continuing Operations ($3660/600)          6.10

Income From Discontinued Operations )$1,200/600)      2.0  

Net Income                                                                          8.10  

Explanation:

The multiple-step income statement can be described as an income statement that differentiate a company's operating revenues and operating expenses from its nonoperating revenues, nonoperating expenses, gains, and losses. It also shows gross profit separately as net sales revenue minus the cost of goods sold.

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

Rembrandt Paint Company

Income Statement

For the Year Ended December 31, 2021

Particulars                                               $'000                $'000      

Sales revenue                                                                 25,000

Cost of goods sold                                                          14,000  

Gross profit                                                                       11,000

Operating expenses

Selling and administrative expense     (3,200)  

Restructuring costs                                (1,500)  

Total operating expenses                                              (4,700)  

Operating income                                                            6,300

Other income (expense)

Interest revenue                                      240

Interest expense                                     (440)

Net interest revenue (expense)                                       (200)  

Income from continuing op. b4 tax                                  6,100

Taxes (40% * $6,100)                                                      (2,440)  

Income From Continuing Operations                              3,660

Discontinued operation

Loss from op. (3,200 * (1-Tax rate))       (1,920)

Gain on disposal (5,200 * (1-Tax rate))  3,120

Income from discontinued op.                                         1,200  

Net income                                                                        4,860  

Number of common shares outstanding                           600

Earning Per Share

Income From Continuing Operations ($3660/600)         6.10

Income From Discontinued Operations )$1,200/600    2.00  

Net Income                                                                        8.10  

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