Question

Problem 4-1

The following information is related to Flint Company for 2017.

Retained earnings balance, January 1, 2017		$989,040
Sales Revenue		26,170,900
Cost of goods sold		16,226,200
Interest revenue		77,000
Selling and administrative expenses		4,772,600
Write-off of goodwill		829,100
Income taxes for 2017		1,349,000
Gain on the sale of investments		117,100
Loss due to flood damage		392,900
Loss on the disposition of the wholesale division (net of tax)		455,300
Loss on operations of the wholesale division (net of tax)		93,560
Dividends declared on common stock		225,300
Dividends declared on preferred stock		73,250

Flint Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Flint sold the wholesale operations to Rogers Company. During 2017, there were 463,100 shares of common stock outstanding all year.

Prepare a multiple-step income statement.

Prepare a retained earnings statement.

Answer 1

Flint Company
Multiple-step Income statement
For the year ended December 31, 2017
Sales Revenue		26,170,900
Less: cost of goods sold		16,226,200
Gross profit		9,944,700
Less: Selling and administrative expenses		4,772,600
Operating income		5,172,100
Non-operating income
Interest revenue	77,000
Gain on the sale of investments	117,100
Total non-operating income		194,100
Income before extra-ordinary items		5,366,200
Write-off of goodwill (considered one time write off.)	(829,100)
Loss due to flood damage	(392,900)	(1,222,000)
Income from continuous operation before tax		4,144,200
Less: tax expense		1,349,000
Income from continuous operation		2,795,200
Income from discontinued operations:
Loss on the disposition of the wholesale division (net of tax)	(455,300)
Loss on operations of the wholesale division (net of tax)	(93,560)
Income from discontinued operations		(548,860)
Net income		2,246,340
Less: Dividends declared on preferred stock		(73,250)
Income attribute to common stock holders		2,173,090
Earnings per share without income from discontinued operations (Income from continuous operation / Number of common share 463100)		$6.04
Earnings per share with income from discontinued operations (Net income / Number of common share 463100)		$4.85

Flint Company
Retained earnings statement
For the year ended December 31, 2017
Retained earnings balance, January 1, 2017		989,040
Add: net income		2,246,340
Total		3,235,380
Less:
Dividends declared on preferred stock	(73,250)
Dividends declared on common stock	(225,300)	(298,550)
Retained earnings balance, December 31, 2017		2,936,830