Question

In: Accounting

10. The following information relates to Nabisco Corporation for the year ended December 31, 2016. All...

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.

Solutions

Expert Solution

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

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