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In: Accounting

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

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)

Solutions

Expert Solution

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

ekkarill92 answered 1 year ago
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