Question E4-17_b - Intermediate Accounting (Kieso)

Question

The following information was taken from the records of Roland Carlson Inc. for the year 2017: income tax applicable to income from continuing operations \(187,000, income tax applicable to loss on discontinued operations \)25,500, and unrealized holding gain on available-for-sale securities (net of tax) \(15,000. 

Gain on sale of equipment \)95,000      Cash dividends declared    $150,000

Loss on discontinued operations75,000 Retained earnings January1,2017 600,000

Administrative expenses               240,000        Cost of goods sold     850,000

Rent revenue                                   40,000          Selling expenses       300,000

Loss on write-down of inventory 60,000          Sales revenue             1,900,000

Shares outstanding during 2017 were 100,000.

Instructions

1. Prepare a single-step income statement.
2. Prepare a comprehensive income statement for 2017 using the two statement format.
3.  Prepare a retained earnings statement for 2017.

Step-by-Step Solution

Answer

(b) Comprehensive income of the company is $363,500.

Comprehensive Income

A comprehensive income is the combination of net income and other unrealized income. Unrealized income includes the gains or losses associated with the financial instruments.

Preparation of Comprehensive Income Statement

Roland Carlson Inc.
Income Statement
For the year ended 2017
Particulars	Amounts ($)
Sales	1,900,000
Less: Cost of goods sold	(850,000)
Gross profits	1,050,000
Less: Selling and administrative expenses	(540,000)
Net Income	$510,000

 

Roland Carlson Inc.
Comprehensive Statement
For the year ended 2017
Particulars	Amounts ($)
Net Income	348,500
Add: Other comprehensive income
Unrealized Holding Gain	15,000
Comprehensive Income	$363,500