Question

10. The following information relates to Nabisco Corporation for the year ended December 31, 2016. All amounts are before income taxes. Assume a 25% income tax rate for all items.

     Net sales                                                $ 1,050,000

     Other expenses and losses                                 $ 100,000

     Operating expenses                                         $ 200,000

     Other revenues and gains                                   $ 60,000

     Cost of goods sold                                         $ 450,000

     Unrealized loss on available-for-sale securities           $ 50,000

Additional information:

The entire snack division was discontinued on September 30. The loss from operations for this division before income tax was $60,000. The snack division was sold at a gain of $40,000 before income taxes.

Instructions

Prepare a statement of comprehensive income for the year in good form. Make sure to include all the proper subtotals.

Answer 1

Nabisco Corporation
Income statement
For the year ended December 31,2016
Particulars		Amount ($)
Sales revenue		1,050,000
Cost of goods sold		450,000
Gross profit		600,000
Operating expenses		200,000
Income from operations		400,000
Other revenues and gains		60,000
Other expenses and losses		100,000
Income from continuing operations before income tax		360,000
Income tax (25% of $360,000)		90,000
Income from continuing operations		270,000
Discontinued operations
Loss on disposal 60,000-40,000)	20,000
Less : Applicable income tax (20,000*25%)	5,000	15,000
Net income		255,000
Other comprehensive income
Items that may be reclassified subsequently to net income or loss:
Unrealized loss on available-for-sale securities	50,000
Less : Applicable income tax (50,000*25%)	12,500	37,500
Comprehensive income		292,500