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Comprehensive Income Framework The following is an alphabetical list of accounts for the Mack Company: Accounts...

Comprehensive Income Framework

The following is an alphabetical list of accounts for the Mack Company:

Accounts Payable Common Stock, $10 par
Accounts Receivable Delivery Expense
Accumulated Depreciation: Buildings and Office Depreciation Expense: Buildings and Office
   Equipment    Equipment
Accumulated Depreciation: Store and Delivery Depreciation Expense: Store and Delivery
   Equipment    Equipment
Administrative Salaries Dividend Income
Advertising Expense Dividends Payable
Allowance for Doubtful Accounts Freight on Purchases
Bad Debts Expense Fund to Retire Long-Term Bonds
Bonds Payable Gain on Sale of Division T
Buildings Gain on Sale of Equipment
Cash Income Tax Expense
Cash Dividends Declared Insurance Expense
Interest Expense Purchases
Interest Income Purchases Discounts Taken
Interest Payable Purchases Returns and Allowances
Investment in Securities (Long-Term) Rent Revenue
Loss from Operations of Discontinued Division T Retained Earnings, January 1, 2016
Loss on Sale of Office Equipment Salaries Payable
Merchandise Inventory, January 1, 2016 Sales
Merchandise Inventory, December 31, 2016 Sales Commissions
Miscellaneous Office Expenses Sales Discounts Taken
Miscellaneous Sales Expenses Sales Salaries
Mortgage Payable Stock Dividends Declared
Office Salaries Unearned Rent
Office Supplies Used Unexpired Insurance
Paid-in Capital on Common Stock Unrealized Increase in Fair Value of
Prepaid Office Supplies Available-for-Sale Securities
Property Tax Expense Utilities Expense

Required:

Ignoring amounts, select the appropriate accounts of Mack Company and prepare for 2016:

1. A multiple-step income statement with proper subheadings.

MACK COMPANY
Income Statement
For Year Ended December 31, 2016
Sales $XXXX
Less: Sales discounts taken (XX)
Less: Purchases discounts taken $XXXX
Cost of goods sold
Selling expenses $XXX
$XXX
XX
$XXX
$XX
XX (XX)
XXX
Cost of goods available for sale $XXX
(XX)
Cost of goods sold (XXX)
Gross profit $XXXX
Operating expenses
Selling expenses
$XX
XX
XX
XX
XX
Total selling expenses $XXX
Administrative expenses
$XX
XX
XX
XX
XX
XX
XX
XX
Total administrative expenses XXX
Depreciation expenses
$XX
(XX)
Total depreciation expenses (XX)
Total operating expenses
Operating income $XXXX
Other items
$XX
XX
XX
XX
(XX)
(XX) XXX
Pretax income from continuing operations $XXXX
(XXX)
$XXXX
Results from discontinued operations
$(XXX)
XXX XXX
Net Income
Components of Income EPS
$X.XX
X.XX
$X.XX

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2. A statement of comprehensive income.

MACK COMPANY
Statement of Comprehensive Income
For Year Ended December 31, 2016
$XXXX
Other comprehensive income
XX
Comprehensive income $XXXX

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3. A retained earnings statement.

MACK COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2016
$XXXX
XXXX
$XXXX
$XXX
XXX (XXX)
$XXXX

Solutions

Expert Solution

SOLUTION

1.

MACK COMPANY

Income Statement

For Year Ended December 31, 2016

Sales................................................................................. $XXXX

Less: Sales discounts taken......................................... (XX)

Net sales.......................................................................... $XXXX

Cost of good s sold:

Merchandise inventory, 1/1/2016 ........................ $ XXX Purchases................................................................. $XXX

Freight on purchases.......................................... XX

Cost of purchases................................................... $XXX

Less: Purchases discounts taken.......................... $XX

Purchases returns and allowances............ XX (XX)

Net purchases......................................................... XXX

Cost of goods available for sale.......................... $ XXX

Less: Merchandise inventory, 12/31/2016....... (XX)

Cost of good s sold.................................................. (XXX)

Gross profit.................................................................. $XXXX

Operating expenses: Selling expenses:

Sales commissions ........................................$ XX

Sales salaries................................................. XX

Delivery expense.......................................... XX

Advertising expense.................................... XX

Miscellaneous sales expense..................... XX

Total selling expenses ........................... $ XXX

Administrative expenses:

Administrative salaries ................................. $ XX

Ba d debt expense....................................... XX

Insurance expense...................................... XX

Office salaries............................................... XX

Miscellaneous office expenses.................. XX

Office supplies used.................................... XX

Utilities expense ............................................ XX

Property tax expense.................................. XX

Total administrative expenses............. XXX

Depreciation expenses:

Depreciation expense: building and

office equipment ...................................... $ XX

Depreciation expense: store and

delivery equipment ..................................

Total depreciation expenses...............

XX

XX

Total operating expenses..................................

Operating income ....................................................

(XXX)

$XXXX

Other items:

Rent revenue ......................................................$ XX

Dividend income ................................................ XX

Gain on sale of equipment ............................... XX

Interest income ................................................... XX

Interest expense .................................................. (XX)

Loss on sale of office equipment ..................... (XX) XXX

Pretax income from continuing operations .......... $XXXX

Income tax expense ................................................. (XXX)

Income from continuing operations ...................... $XXXX

Results from discontinued operations:

Loss from operations of discontinued

Division T (net of income tax credit) ......... $(XXX)

Gain on sale of Division T

(net of income taxes) .................................. XXX XXX

Net income ................................................................ $XXXX

Earnings per Common Share

Components of Income (# of common shares)

Income from continuing operations $ X.XX

Results from discontinued operations X.XX

Net income $ X.XX

2.

MACK COMPANY

Statement of Comprehensive Income

For Year Ended December 31, 2016

Net income .................................................................................... $XXXX

Other comprehensive income:

Unrealized increase in fair value of available-for-sale

Securities (net of income taxes)..................................... XX

Comprehensive income.............................................................. $XXXX

3.

MACK COMPANY

Statement of Retained Earnings

For Year Ended December 31, 2016

Retained earnings, 1/1/2016 .......................................................$XXXX

Add: Net income for 2016........................................................ XXXX

$XXXX

Less: Cash dividends declared ........................... $XXX

Stock dividends declared .....................................XXX (XXX)

Retained earnings, 12/31/2016 .................................................$XX

ekkarill92 answered 1 year ago
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