Question

The following information is available from the accounting records of DeWitt Engineering Ltd. for the year ended June 30, 2021:

Fee discounts and allowances

$26,000

Fee revenue

1,560,000

Interest revenue

6,000

Other operating expenses

590,000

Salaries expense

750,000

Gain on fair value adjustments on equity investments

31,000

Instructions
Prepare a combined Statement of Income and Comprehensive Income for the year ended June 30, 2021. The company has a 30% income tax rate and records gains and losses on equity investments as other comprehensive income.

Answer 1

DeWitt Engineering Ltd
Statement of Income and Comprehensive Income
Particulars	Year ended June 30, 2021	Year ended June 30, 2021	Remarks
Revenue		$1,534,000	(Fee revenue 1,560,000 Less Fee discounts and allowances $26,000)
Other income		$6,000	(Interest revenue 6,000)
		$1,540,000	(a)
Employee benefits expense	750,000		(Salaries expense 750,000)
Other expense	590,000		(Other operating expenses 590,000)
Total expense		(1,340,000)	(b)
Profit before tax		$200,000	(c=a+b)
Tax expense		(60,000)	(d=c*30%)
Profit after tax		$140,000	(e=c+d)
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments	31,000	(f)
Tax expense		(9,300)	(g=f*30%)
Other comprehensive income, net of tax	21,700	(h=f+g)
Total comprehensive income		$161,700	(e+h)