Question

Arrange the following income statement items so they are in the proper order of an income statement:

Taxes	Earning per share
Share Outstanding	Earning before taxes
Interest Expense	Cost of goods sold
Depreciation Expense	Earning after taxes
Preferred Stcok dividends	Earning available to common stockholders
Sales	Selling and administrative expense
Gross profit

Short answer

The costs of goods sold are deducted from sales to derive the gross profits. The gross profits are further reduced by selling and administrative cost, interest expense, depreciation expense to derive the earnings before tax. The taxes are subtracted from the earnings before tax to derive the earnings after tax. The preferred stock dividends are further reduced to derive earnings available to common stockholders. The earnings of common stockholders are divided by shares outstanding to calculate the earnings per share.

Step-by-step solution

Income statement

An income statement is a major component of the financial statement prepared by an organization to show its financial performance.

Arrangement of income item in proper order 

S.no.	Particulars
1.	Sales
2.	Cost of goods sold
3.	Gross profit
4.	Selling and administrative cost
5.	Interest Expense
6.	Depreciation Expense
7.	Earning Before taxes
8.	Taxes
9.	Earning after taxes
10.	Preferred stock dividends
11.	Earning available to common stockholders
12.	Shares outstanding
13.	Earnings per shares