Question

In: Accounting

Canada Wheels Ltd. manufactures and sells parts for automobiles. Canada Wheels Ltd. has the following balances...

Canada Wheels Ltd. manufactures and sells parts for automobiles. Canada Wheels Ltd. has the following balances in its general ledger on December 31, 2018. (In thousands of Canadian dollars).

The company had 15,000 common shares outstanding throughout this fiscal year. The company did not have any preferred shares.   Assume that the income tax rate is 30% on all items.

              

Cost of Sales

      90,000

Sales Revenue

    143,700

Interest Expense on L/T Debt

      21,000

Selling and Administrative expense

      12,000

Write-off of obsolete inventory

         3,000

Impairment of tangible capital assets

         1,500

General Advertising expense

         1,000

Amortization Expense

         4,000

Restructuring Cost

         1,200

Gain on disposal of discontinued segment

      15,000

Deferred Loss on Pension Funds

         2,500

Required: Prepare, in good form, a comprehensive income statement, using a multi-step format and on the basis of functions of expense. No disclosure notes required.

Solutions

Expert Solution

Statement of Profit and loss and other comprehensive income for the year ended 31.12.2018
Continued Operations
Revenue             143,700
Cost of Sales             (93,000)
Gross Profit              50,700
Distribution Expenses                    -  
Administration Expenses             (18,200)
Operating Profit              32,500
Finance Cost             (21,000)
Investment Income                    -  
Profit before Tax              11,500
Income Tax Expenses                    -  
Profit from continuing operations for the period              11,500
Discontinued Operations
Gain on Disposal of Discontinued Segment              15,000
Profi/(Loss) for the period              26,500
Other Comprehensive Income for the year (after tax):
Items that will not be reclassified to profit or loss:
Impairment of Tangible Capital assets              (1,500)
Deferred Loss on Pension Funds              (2,500)
Items that may be reclassified subsequently to profit or loss:                    -  
Total Comprehensive Income for the period              22,500
Workings
Administration Expenses
Selling and Administrative expense 12000
Restructurng Cost 1200 Restructuring expense is considered nonrecurring operating expenses
General Advertising expense 1000
Amortization Expense 4000
             18,200
Write-off of obsolete inventory           3,000 Since this is a small amount, we can charge to cost of Goods sold

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