Question

Presented below is information related to Bonita Corp. for the year 2017.

Net sales		$1,392,100		Write-off of inventory due to obsolescence		$81,030
Cost of goods sold		780,300		Depreciation expense omitted by accident in 2016		45,000
Selling expenses		74,600		Casualty loss		51,800
Administrative expenses		52,500		Cash dividends declared		41,740
Dividend revenue		27,800		Retained earnings at December 31, 2016		889,370
Interest revenue		7,120		Effective tax rate of 34% on all items 1- Prepare a multiple-step income statement for 2017. Assume that 55,620 shares of common stock are outstanding. (Round earnings per share to 2 decimal places, e.g. 1.49.) 2- Prepare a separate retained earnings statement for 2017. (List items that increase adjusted retained earnings first.)

Answer 1

BONITA CORP.
Income Statment
For the Year Ended December 31, 2017
Revenue
Net Sales		$1,392,100
Cost of Goods Sold		$780,300
Gross Profit / (Loss)       [Net Sales - Cost of Goods Sold]		$611,800
Operating Expenses
Selling Expenses	$74,600
Administrative Expenses	$52,500
Total Operating Expenses		$127,100
Income From Operations     [$611,800 - $127,100]		$484,700
Other Revenue and Gains:
Dividend Revenue	$27,800
Interest Revenue	$7,120
		$34,920
		$519,620
Other Expenses and Gains
Casualty Loss		$51,800
Write-Off of Inventory Due to Obsolescence		$81,030
Income Before Income Tax		$386,790
Income Tax Expense   [$386,790 x 34%]		$131,508.60
Net Income / (Loss)		$255,281.40
Earnings Per Share
Net Income / (Loss)       [$255,281.40 / 55,620 shares]		$4.59

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BONITA CORP.
Retained Earnings Statement
For the Year Ended December 31, 2017
Retained Earnings, January 1, as reported	$889,370
Correction for Overstatement of Net Income in Prior Period	$45,000
Retained Earnings, January 1, as adjusted     [$889,370 - $45,000]	$844,370
Add: Net Income	$255,281.40
	$1,099,651.40
Less: Dividend Declared	$41,740
Retained Earnings, December 31	$1,057,911.40