Question

Presented below is information related to Tobias Corp., for the year 2020. Required: Prepare a multiple-step Income Statement and Statement of Retained Earnings for 2020 in good form (with headings). Assume the 300,000 shares of common stock were outstanding during 2020.

Administrative Expenses 70,000

Cost of Goods Sold 1,200,000

Depreciation Expense overstated in 2015 105,000

Dividend revenue 30,000

Dividends Declared 120,000

Effect on prior years of Change in Accounting Principle (credit) 220,000

Gain from sale of land in discontinued component 300,000

Interest Expense 45,000

Interest Revenue 20,000

Loss from operations in discontinued component of business 240,000

Retained Earnings, 1/1/2020 460,000

Sales Discounts 12,000

Sales Return & Allowances 50,000

Sales Revenue $ 1,950,000

Selling Expenses 95,000

Write-off of Goodwill due to Impairment 75,000

Federal tax rate of 20% on all items

Answer 1

Multiple-step Income statement
	Particulars	$
	Sales revenue (Gross)	$      1,950,000
	Less Discount	$          (12,000)
	Less return & allowances	$          (50,000)
	Net sales	$      1,888,000
Less	COGS	$      1,200,000
	Gross margin	$          688,000
Less	Opearting expenses
	Administrative expenses	$          (70,000)
	Selling expense	$          (95,000)
	Opearting Income	$         523,000
	Nonoperating income
	Dividend	$            30,000
	Gain from sale of land	$          300,000
	Interest revenue	$            20,000
	Nonoperating expenses
	Interest expense	$          (45,000)
	Impairement of goodwill	$          (75,000)
	Income from continuing operation before tax	$         753,000
Less	Tax @ 20%	$        (150,600)
	Income from continuing operation after tax	$          602,400
Less	Loss from discontinued operation	$        (192,000)
	Net income	$         410,400
Add	Other comprehensive income	0
	Comprehensive income	$         410,400

Retained earnings
Particulars	$
Opening balance	$    460,000
Add prior period item	$    105,000
AddChange in accounting principle	$    220,000
Less Dividend declared	$ (120,000)
Add Net income	$    410,400
	$ 1,075,400

For any clarification, please comment. Kindly Up Vote!