Problem:
Electro Wizard Company produces a popular video game called Destructo which sells for $32. Last year ElectroWizard sold 50,000 Destructo games, each of which costs $6 to produce. Electro Wizard incurred selling and administrative expenses of $80,000 and depreciation expense of $10,000. In addition, Electro Wizard has a $100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding. Show and explain all work.
Prepare an income statement for Electro Wizard in good form and include earnings per share (EPS)
ElectroWizard Company Income Statement
for the year ended 12/31/2009
Sales: ___________________
Less: Cost of Goods Sold: _______________
Selling and administrative
Depreciation: _____________________
Operating Profit (EBIT):________________
Less: Interest expense: _______________
Earnings before taxes: ________________
Less: Taxes _______________________
Net Income: ________________________
Common Shares: _______________
Earnings per share: _________