Question

Kindly, solve both question 1 and 2

Question 1:
ABC, Inc., reported income from continuing operations (before taxes) of $55,000. In addition, there was a $15,000 loss (pretax) on the sale of a discontinued component of the business. Taxes of $16,500 (30%) were paid on income from continuing operations.
Required:
Prepare the bottom section of the income statement.

Question 2:
XYZ Company had the following information related to its financial statements:
1) The company issued bonds in the amount of $50,000.
2) The company earned net income of $78,900 and declared a cash dividend of $0.25 per share. Currently there are 50,000 ordinary shares outstanding.
3) Retained earnings at January 1, 2016 was $82,000.
Required:
Prepare a statement of retained earnings for December 31, 2016.

Answer 1

ABC Inc.
Income Statement (Extract)
Profit before taxes	$                  55,000
Income Tax expenses	16,500
Profit for the year from continuing operations	38,500
Loss for the year from discontinued operations	(15,000)
Profit for the year	23,500

Answer 1

Answer 2

XYZ Company
statement of retained earnings
For the year ended December 31, 2016.
Particulars	$	$
Retained Earnings, Jan 1, 2016		82,000
Add: Net Income	78,900
Less: Dividends (50,000 shares * $ 0.25)	(12,500)	66,400
Retained Earnings, Dec 31, 2016		148,400