Question

I need to create a multi step income statement and statement of retained earnings with the following information ( assume a 30% tax rate and 500,000 shares of common stock)

Accounts Receivable                       $555,000

Accumulated Depr.-equipment          450,000

Accumulated Depr.-buildings            360,000

Allowance for doubtful accts.              36,000

Common Stock                           2,000,000

Depreciation Expense (equipment)      50,000

Depreciation Expense (buildings)         60,000

Dividends (common stock)               120,000

Dividends Payable                            30,000

Insurance Expense                             35,000

Interest Expense                               40,000

Interest Payable                                20,000

Notes Payable (1/1/25)                 1,000,000

Prepaid Insurance                              95,000

Purchases                                      975,000

Rent Receivable                               15,000

Rent Revenue                                  90,000

Retained Earnings (1/1/15)               818,000

Salaries Expense                             775,000

Salaries Payable                               25,000

Sales Returns                                   13,000

Sales Revenue                             2,975,000

there is additional information

1. bad debt expense for the current year not yet recorded 12,000

2.  An internal audit discovered that amortization expense of intangible assets was not recorded by the amount of $41,000 for this year

3.The company sold its only investment in held-to-maturity securities during the current year at a gain of $145,000. This gain is considered unusual in nature and infrequent in occurrence

4. At the beginning of the year, sold equipment for $50,000. The machine originally cost $76,000 and had accumulated depreciation of $32,000.

5. The company totally discontinued its mining operations during the year. The loss on operations of the discontinued subsidiary was $80,000 before taxes while there was a gain on disposal of mining assets of $120,000 before taxes.

6. a periodic inventory system and Inventory (1/1/15) is $175,000 and Inventory (12/31/15) is $225,000.

7. Unrealized (holding) gain on available-for-sale securities, net of tax, for 2015 is $32,000.

Please show work and explain calculations were possible

Answer 1

It is to be noted that the sum is solved as per IFRS and not as per US-GAAP.

Income Statement for the year 2015
Particulars	Amount in $
Revenue from Operations
Sales	29,62,000
Cost of Goods Sold	9,25,000
Gross Profit	20,37,000
Operating Expenses
Depreciation	1,10,000
Amortisation	41,000
Insurance	35,000
Salaries	7,75,000
Allowance for Doubtful Debts	36,000
Bad Debt Expense	12,000
Total Operating Expenses	10,09,000
Operating Income	10,28,000
Non-Operating Income
Gain on Sale of Investment	1,45,000
Gain on Sale of Equipment	6,000
Loss on Discontinued Operations	-80,000
Gain on Disposal of Mine [Net of Taxes] [Tax at 30%]	84,000
Rent	90,000
Dividend	-1,20,000
Interest	40,000
Total Non Operating Income	1,65,000
Net Income	11,93,000
Total Proft before tax	11,93,000
- Tax @ 30%	3,57,900
Profit After Tax	8,35,100
Other Comprehensive Income	32,000
Profit for the Year	8,35,100
Other comprehensive income for the year	32,000
Total Comprehensive Income	8,67,100

Cost of Goods Sold = Opening Stock + Purchases - Closing Stock

1,75,000 + 9,75,000 - 2,25,000

= 9,25,000

Other Comprehensive Income consists if unrealised gain on - available-for-sale securities, net of tax, for 2015 $32,000.

Statement of Retained Earnings
Particulars	Retained Earnings	Other Comprehensive Income
01-01-2015	8,18,000	-
Additions	8,35,100	32,000
Subtractions	-	-
31-12-2015	16,53,100	32,000