Question

The following information is related to Nash Company for 2017.

Retained earnings balance, January 1, 2017		$983,980
Sales Revenue		26,111,200
Cost of goods sold		16,270,700
Interest revenue		78,300
Selling and administrative expenses		4,791,200
Write-off of goodwill		839,300
Income taxes for 2017		1,430,000
Gain on the sale of investments		112,800
Loss due to flood damage		399,900
Loss on the disposition of the wholesale division (net of tax)		456,100
Loss on operations of the wholesale division (net of tax)		97,110
Dividends declared on common stock		248,900
Dividends declared on preferred stock		87,900

Nash Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Nash sold the wholesale operations to Rogers Company. During 2017, there were 547,900 shares of common stock outstanding all year.

1. Prepare a multiple-step income statement.

2. Prepare a retained earnings statement.

Answer 1

1.

Nash Company
Income Statement
for the year ended 31 december, 2017
Sales revenue		$ 26,111,200
cost of goods sold		$ 16,270,700
gross profit		$    9,840,500
selling and administrative expenses		$    4,791,200
income from operations		$    5,049,300
other revenues and gains
interest revenue	$    78,300
Gain on the sale of investment	$ 112,800	$        191,100
		$    5,240,400
other expenses and losses
Write off of goodwill	$ 839,300
Loss due to flood damage	$ 399,900
		$    1,239,200
Income from continuing operation before tax		$    4,001,200
income taxes		$    1,430,000
Income from continuing operation		$    2,571,200
Discontinued operations
loss on Disposal of the whole sale division (net of tax)	$ 456,100
loss on operations of the whole sale division (net of tax)	$    97,110	$        553,210
net income		$    2,017,990
Earning per common shares
Income from continuing operations ($2,571,200/547,900)		$               4.69
Discontinued operations
loss on disposal of the whole sale division (net of tax) ($456,100/547,900)	$      (0.83)
loss on operations of the whole sale division (net of tax) ($97,110/547,900)	$      (0.18)
		$            (1.01)
Net income / (loss)		$               3.68

2.

Nash Company
Statement of retained earnings
for the year ended 31 december, 2017
Retained earnings balance, January 1, 2017	$     983,980
Add: Net income	$ 2,017,990
Less: Dividends ($248,900+$87,900)	$   (336,800)
Retained earnings balance, December 31, 2017	$ 2,665,170

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