Question

The following information was taken from the records of Skysong Inc. for the year 2017: Income tax applicable to income from continuing operations $213,724; income tax applicable to loss on discontinued operations $28,186, and unrealized holding gain on available-for-sale securities (net of tax) $23,100. Gain on sale of equipment $97,400 Cash dividends declared $153,000 Loss on discontinued operations 82,900 Retained earnings January 1, 2017 542,500 Administrative expenses 246,100 Cost of goods sold 894,100 Rent revenue 42,300 Selling expenses 322,400 Loss on write-down of inventory 61,700 Sales Revenue 2,013,200 Shares outstanding during 2017 were 90,400.

1. Prepare a multiple-step income statement.

2. Prepare a comprehensive income statement for 2017, using the two statement format.

3. Prepare a retained earnings statement for 2017.

Answer 1

Ans-1- SKYSONG INC.

Income Statement

For the Year Ended 2017

Revenue
Sales	2,013,200
Rent revenue	42,300
Total revenue		2,055,500
Expenses:
COGS	894,100
Selling Expenses	322,400
Administrative expenses	246,100
Total Expenses		1,462,600
Income from continuing operations before tax		592,900
Income tax		213,724
Income from continuing operations		379,176
Discontinued operations
Loss on discontinued operations	82,900
Less: applicable income tax reduction	28,186	54,714
Income before extraordinary items		324,462
Extraordinary Items
Extraordinary gain	97,400
Less: Income tax applicable on gain	-	97,400
Extraordinary loss	61,700
Less: Income tax applicable on loss	-	61,700
Net Income		360,162 (324,462+97,400-61,700)
Per share of common stock
Income from continuing operations		4.19 ($379,176/90,400)
Loss on discontinued operation s		(0.61) ($54,714/90,400)
Income before extraordinary income		3.58 (4.19-0.61)
Extraordinary gain net of tax		1.08 (97,400/90,400)
Extraordinary loss net of tax		(0.68) (61,700/90,400)
Net Income		3.98 (3.58+1.08-0.68)

Comprehensive Income Statement

Net income	360,162
Other Comprehensive income
Unrealized holding gain, net of tax	23,100
Comprehensive income statement	383,262

Retained Earnings

Retained Earnings -January	542,500
Add: Net income	360,162
	902,662
Less: Dividend declared	153,000
Retained Earnings- December	749,662