Question

****I apologize in advance, the formating is pushing the numbers towards the decriptions and I tried to fix, but keeps pushing it back.

Rox Corporation's Multiple Step Income statement and retained earnings statement for the year ended December 31, 2019, as a developed by its bookkeeper, are shown here:

Revenue Statement

December 31, 2019

Sales (net)                                                                                                                    $179,000.00

Plus: Income from operations of discontinued Division P 3,200.00

Less: Dividends declared ($1.50 per common share) (7,500.00)

Net Revenues $174,700.00

Less: Selling Expenses (19,000.00)

Gross Profit $155,700.00

Less: Operating Expenses

            Interest expense                                                                        $4,100.00

            Loss on the sale of Division P                                                      4,000.00

            Cost of goods sold                                                                    110,700.00

            Income tax expense on income from continuing operations 4,380.00

                 Total Operating expenses                                                                             (123,180.00)

Operating income $32,520.00

Miscellaneous Items:

            Dividend revenue                                                                          1,800.00

            General and administrative expense                                           (24,300.00)        (22,500.00)

Income before unusual items 10,020.00

            Loss on sale of land                                                                  (4,800.00)

            Correction of error last year’s income                                         5,000.00                   200.00

Net Income $10,220.00

                                                Retained Earnings Statement

                                                            December 31, 2019

Beginning retained earnings                                                                                           $62,850.00

Add: Net Income 10,220.00

Adjusted retained earnings                                                                                             $73,070.00

Less: Loss from theft (9,200.00)

Ending retained earnings $63,870.00

It is determined that the balance listed are correct but are incorrectly classified in certain cases. The company’s tax rate is 30% and has not been applied correctly as shown. No shares of common stock were issued or retired during 2019.

Question:

***Prepare a corrected multiple step income statement for 2019 in “good format.” Need to determine the correct beginning balance of retained earnings and then prepare a correct 2019 retained earnings statement.

  

Answer 1

Ana-1 Preparing Rox Corporation 's multiple step Income Statement For the year 2019 as shown below:-

Rox Corporation

Income Statement

For the Year Ended December 31,2019

Particulars	Amount ($)	Amount ($)
Net Sales		179,000
Less: Cost of goods sold		(110,700)
Gross profit		68,300
Operating Expenses:
Selling expenses	19,000
General and administrative expenses	24,300
Total Operating expenses		(43,300)
Total Operating Income		25,000
Other items:
Loss on sale of land	(4,800)
Dividend income	1,800
Interest expenses	(4,100)	(7,100)
Pretax income from continuing operations		17,900
Income tax expenses		(4,380)
Income from continuing opeartion		13,520
Result from discontinued operation:
Loss on sale of division P ($4,000-30% of $4,000)	(2,800)
Income from operattion of discontinued division P ($3,200-30%0f $3,200)	2,240	(560)
Income before unusual item		$12960
Loss from theft (net of $2,760 income tax credit)		(6,440)
Net income		$6,520

Determining the beginning balance of retained earnings as shown below:

Particulars	Amount ($)
Retained earnings, December 31,2019	63,870
Add:Dividend declared	7,500
	71,370
Less; Net income	6,520
Correct retained earnings, january 1,2019	$64,850

Determine the Retained earnings statement for the year ended December 31, 2019 as shown below:

Statement of Retained Earnings

As on December 31,2019

Particulars	Amount ($)
Retained earnings,January 1,2019	64,850
Add:-prior period adjustment ($5,000-30%0f $5,000)	3,500
Net income	6,520
Adjusted retained earnings,January 1,2019	74,870
Less:Dividend declared	(7,500)
Retained earnings,December 31,2019	$67,370