Question
Brightwell Corporation had net sales of $3,000,000 and interest revenue of $38,750 during 2027. Expenses for 2027 were cost of goods sold $1,812,500, administrative expenses $265,000, selling expenses $350,000, and interest expense $56,250. Brightwell's tax rate is 30%. The company had 100,000 shares authorized and 70,000 shares issued and outstanding during 2027. Prepare an income statement for the year ended December 31, 2027.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 33 — Earnings per Share
Basic EPS is profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding. Both halves need care: the numerator is after preference dividends, and the denominator weights each share issue by the fraction of the year it was outstanding.
Common mistakes
- Using the closing share count instead of the weighted average.
- Failing to deduct preference dividends from profit before dividing.
- Time-weighting a bonus issue or share split — these are treated as though they existed for the whole of every period presented, including comparatives.