Question

The following information was taken from the records of Skysong Inc. for the year 2017: Income tax applicable to income from continuing operations $213,724; income tax applicable to loss on discontinued operations $28,186, and unrealized holding gain on available-for-sale securities (net of tax) $23,100. Gain on sale of equipment $97,400 Cash dividends declared $153,000 Loss on discontinued operations 82,900 Retained earnings January 1, 2017 542,500 Administrative expenses 246,100 Cost of goods sold 894,100 Rent revenue 42,300 Selling expenses 322,400 Loss on write-down of inventory 61,700 Sales Revenue 2,013,200 Shares outstanding during 2017 were 90,400.

(1) Prepare a multiple-step income statement.

(2) Prepare a retained earnings statement for 2017.

Answer 1

INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Revenues
Sales	$2,013,200
Rent revenue	$42,300
Total revenues		$2,055,500
Expenses
Cost of goods sold	$894,100
Selling expenses	$322,400
Administrative expenses	$246,100
Total expenses		$1,462,600
Income from continuing operation before income tax		$592,900
Income tax		$213,724
Income from continuing operations		$379,176
Discontinued operations
Loss on discontinued operations	$82,900
Less: Applicable income tax reduction	$28,186	$54,714
Net income		$324,462
Other comprehensive income:
Unrealized holding gain, net of tax		$23,100
Comprehensive income		$347,562
Per share of common stock:
Income from continuing operations ($379,176/90,400)		4.19
Loss on discontinued operations, net of tax (54,714/90,400)		0.61
Net Income (324,462/90400)		3.59
Retained earnings statement
Opening balance		$542,500
Add: Net income		$347,562
Less: Dividends paid		$153,000
Closing balance		$737,062