Question

The following income statement items appeared on the adjusted trial balance of XYZ Corporation for the year ended December 31, 2021 ($ in 000s): sales revenue, $22,300; dividend revenue from investments, $200; interest revenue $150; cost of goods sold, $14,500; selling expense, $2,300; general and administrative expense, $1,200; interest expense, $300. Income taxes have not yet been accrued. The company's income tax rate is 20% on all items of income or loss. These revenue and expense items appear in the company's income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in 000s). All transactions are material in amount.

1. Investments were sold during the year at a loss of $300. XYZ also had an unrealized gain of $200 for the year on investments. The unrealized gain represents a increase in the fair value of debt securities and is classified as part of other comprehensive income.

2. One of the company's factories was closed during the year. Restructuring costs incurred were $1,000.

3. During the year, XYZ completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP regarding discontinued operations. The division had incurred operating income of $500 in 2021 prior to the sale, and its assets were sold at a gain of $ 400.

4. A negative foreign currency translation adjustment for the year totaled $300.

5. Amortization expense was understated by $60 in 2020.

6. The Corporation incurred $100 in research and development costs during 2021.

7. Inventory that had cost $80 had become obsolete because a competitor introduced a better product. The inventory was written down to its scrap value of $10.

8. Retained earnings 12/31/20 is $400.

9. One million shares of common stock were outstanding as of 12/31/20. The following additional issuances of shares occurred during 2021: a.) 4/1/21 issued 50,000 shares and b.) 7/1/21 issued 40,000 shares

10., The Corporations declared and paid $100 of preferred dividends and declared $100 (of which $25 will be paid January 15, 2022) of common dividends.

Required:

Based on the all of the information provided, answer the following questions as they would appear in a single, continuous multiple-step statement of comprehensive income for 2021. Round all numbers excepts earnings per share to whole numbers. (each 2 points)

Select and copy sections 1-13 below to answer in the space provided

Gross profit ________________

Total operating expenses ________________

Operating income ________________

Total other revenue/(expense) _______________

Income before Tax ________________

Income tax expense ________________

Income from continuing operations (IFCO) ________________

Discontinued operations ________________

Net income ________________

Other comprehensive income ________________

Comprehensive income ________________

Earnings per share (IFCO only) ________________

Retained earnings 12/31/21 ________________

Answer 1

1) Gross profit = Sales- Cost of goods sold

	sales revenue	22,300
Less-	cost of goods sold	(14,500)
	Gross Profit	7,800

2) Operating expenses

Selling expense	2,300
General and administrative expense	1,200
	3,500

3) Operating income

	sales revenue	22,300
Less-	cost of goods sold	(14,500)
	Gross Profit	7,800
Less:-	Selling expense	2,300
	General and administrative expense	1,200
	Operating Income	3,500

4) Total other revenue/(expense)

Dividend revenue from investments	200
Interest revenue	150
Loss on investments	(300)
Unrealized gain	200
foreign currency translation adjustment	300
Amortization expense	(120)
Research and development costs	(100)
loss on sale of inventory	(70)
Total other revenue/(expense)	260

5) Income before tax

	sales revenue	22,300
Less-	cost of goods sold	(14,500)
	Gross Profit	7,800
Less:-	Selling expense	2,300
	General and administrative expense	1,200
	Operating Income	3,500
	Dividend revenue from investments	200
	Interest revenue	150
	Loss on investments	(300)
	Unrealized gain	200
	foreign currency translation adjustment	300
	Amortization expense	(120)
	Research and development costs	(100)
	loss on sale of inventory	(70)
Add:-	Total other revenue/(expense)	260
	Income before Tax	3,760

6) Income tax expense

	Income before Tax	3,760
Less:	Tax expense @ 20%	(752)

7) Income from continuing operations (IFCO)

	Income before Tax	3,760
Less:	Tax expense @ 20%	(752)
	Income after tax	3,008

8) Discontinued operations

	Operating income from discontinued operations	500
Add:-	Gain on assets sold	400
Less:-	Restructuring costs	(1,000)
		(100)

9) Net income

	Income after tax	3,008
	Operating income from discontinued operations	500
Add:-	Gain on assets sold	400
Less:-	Restructuring costs	(1,000)
	Income from discontinued operations	(100)
	Net Income	2,908