Question

The ledger of Port Hope Corporation at November 30, 2021, contains the following summary data:

Cash dividends—common		$65,000		Operating expenses		$1,120,000
Cash dividends—preferred		25,000		Other comprehensive income—loss on equity investments (before income tax)		83,000
Common shares		325,000		Rent revenue		48,000
Cost of goods sold		7,280,000		Preferred shares ($5 noncumulative)		400,000
Depreciation expense		355,000		Retained earnings, December 1, 2020		755,000
Sales		9,124,000

Your analysis reveals the following additional information:

1.		The company has a 25% income tax rate.
2.		The communications devices division was discontinued on August 31. The profit from operations for the division up to that day was $20,000 before income tax. The division was sold at a loss of $75,000 before income tax.
3.		There were 200,000 common and 5,000 preferred shares issued on December 1, 2020, with no changes during the year.

Prepare a multiple-step income statement for the year.

PORT HOPE CORPORATION Income Statement                                                                       November 30, 2021Month Ended November 30, 2021Year Ended November 30, 2021
SalesIncome Tax ExpenseOperating ExpensesProfit on Discontinued Operations of Communication Device DivisionCost of Goods Sold		$
Operating ExpensesIncome Tax ExpenseCost of Goods SoldProfit on Discontinued Operations of Communication Device DivisionSales
Discontinued OperationsEnding Balance, December 31Beginning Balance, November 30ExpensesProfit before Income TaxesComprehensive IncomeTotal ExpensesProfit from Continuing OperationsOther Comprehensive LossTotal Other RevenuesGross ProfitOther RevenuesProfit / (Loss)DividendsProfit from Operations
Depreciation ExpenseIncome Tax ExpenseLoss on Disposal of Discontinued Communication Device DivisionSalesOperating Expenses	$
Income Tax ExpenseSalesDepreciation ExpenseOperating ExpensesLoss on Disposal of Discontinued Communication Device Division
Beginning Balance, November 30Profit from OperationsTotal Other RevenuesTotal ExpensesEnding Balance, December 31Discontinued OperationsDividendsExpensesProfit from Continuing OperationsProfit before Income TaxesOther RevenuesProfit / (Loss)Gross ProfitOther Comprehensive LossComprehensive Income
Discontinued OperationsExpensesProfit before Income TaxesGross ProfitEnding Balance, December 31Total ExpensesDividendsProfit / (Loss)Other Comprehensive LossProfit from OperationsTotal Other RevenuesProfit from Continuing OperationsOther RevenuesComprehensive IncomeBeginning Balance, November 30
Discontinued OperationsOther RevenuesExpensesTotal ExpensesGross ProfitDividendsTotal Other RevenuesProfit / (Loss)Ending Balance, December 31Beginning Balance, November 30Other Comprehensive LossComprehensive IncomeProfit from OperationsProfit from Continuing OperationsProfit before Income Taxes
SalesLoss on Disposal of Discontinued Communication Device DivisionIncome Tax ExpenseOperating ExpensesDepreciation Expense
Beginning Balance, November 30Other RevenuesProfit from Continuing OperationsComprehensive IncomeDiscontinued OperationsOther Comprehensive LossGross ProfitExpensesProfit from OperationsProfit before Income TaxesDividendsProfit / (Loss)Total Other RevenuesTotal ExpensesEnding Balance, December 31
Discontinued OperationsBeginning Balance, November 30Total ExpensesProfit from Continuing OperationsDividendsComprehensive IncomeGross ProfitProfit from OperationsEnding Balance, December 31Total Other RevenuesExpensesOther RevenuesProfit / (Loss)Profit before Income TaxesOther Comprehensive Loss
Operating ExpensesSalesProfit on Discontinued Operations of Communication Device DivisionDepreciation ExpenseLoss on Disposal of Discontinued Communication Device Division
Profit on Discontinued Operations of Communication Device DivisionSalesDepreciation ExpenseLoss on Disposal of Discontinued Communication Device DivisionOperating Expenses
Profit before Income TaxesComprehensive IncomeDividendsDiscontinued OperationsProfit from Continuing OperationsOther RevenuesTotal ExpensesEnding Balance, December 31Other Comprehensive LossBeginning Balance, November 30ExpensesProfit from OperationsGross ProfitProfit / (Loss)Total Other Revenues		$
Earnings per share		$

  

  

Prepare a statement of comprehensive income as a separate statement.

PORT HOPE CORPORATION Statement of Comprehensive Income                                                                       Month Ended November 30, 2021Year Ended November 30, 2021November 30, 2021
ExpensesBeginning Balance, November 30Discontinued OperationsProfit from Continuing OperationsProfit from OperationsOther RevenuesTotal Other RevenuesTotal ExpensesEnding Balance, December 31Other Comprehensive LossComprehensive IncomeProfit before Income TaxesDividendsProfit / (Loss)Gross Profit		$
Profit before Income TaxesBeginning Balance, November 30Comprehensive IncomeDividendsGross ProfitTotal ExpensesProfit from Continuing OperationsOther Comprehensive LossDiscontinued OperationsTotal Other RevenuesProfit from OperationsProfit / (Loss)ExpensesOther RevenuesEnding Balance, December 31
Profit on Discontinued Operations of Communication Device DivisionLoss on Equity Investments (Net)Gain on Income Tax Savings (Net)Gain on Equity Investments (Net)Loss on Income Tax Savings (Net)

Answer 1

Multiple Income Statement		in $
For the year ended November 30 2021
Sales		$9124000
Less: Cost of good sold		7280000
Gross profit		1844000
Less: operating expenses
Depreciation expenses	355000
Operating expenses	1120000
Total operating expenses		1475000
Profits from operations		369000
Other Revenue/(expenses)
Rent Revenue		48000
Profit before income taxes		417000
Income tax expenses (417000*25%)		104250
Income from continuing operations		312750
Discontinuing operations
Profit on Discontinued Operations of Communication Device (net of taxes 20000*75%)	15000
Loss on Disposal of Discontinued Communication Device (net of taxes 75000*75%)	-56250	-41250
Net Income		271500
PORT HOPE CORPORATION
Statement of Comprehensive Income
For the year ended November 30 2021
Net Income	271500
Other comprehensive income—loss on
equity investments (83000*75%)	62250
Total Comprehensive Income	333750
If any doubt please comment