Question

The trial balance for Lindor Corporation, a manufacturing company, for the year ended December 31, 2018, included the following income accounts:

Account Title	Debits	Credits
Sales revenue		2,400,000
Cost of goods sold	1,440,000
Selling and administrative expenses	416,000
Interest expense	44,000
Unrealized holding gains on investment securities		84,000

The trial balance does not include the accrual for income taxes. Lindor's income tax rate is 40%. 1.4 million shares of common stock were outstanding throughout 2018.

Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2018, including appropriate EPS disclosures. (Round EPS answer to 2 decimal places.)

Answer 1

Answer:

Lindor corporation
Statement of comprehensive income
For the year ended December 31, 2018
Sales revenue	2,400,000
Cost of goods sold	1,440,000
Gross profit	960,000
Operating expense
Selling and administrative expense	416,000
Operating income	544,000
Other income(expense)
Interest expense	44,000
Income before tax expense	500,000
Income tax expense	200,000
Net income	300,000
Other comprehensive income
Unrealized holding gains on investment securities, net of tax	50,400
Comprehensive income	350,400
Earnings per share:
Net income	0.21

Calculation:

Here we need to prepare a single, continuous multiple-step statement of comprehensive income for 2018, including appropriate EPS disclosures.

For that first we need to take the Sales revenue and then deduct the Cost of goods sold to get the Gross Profit. Then we need to deduct the Operating expense - Selling and administrative expense provided in the question to get the Operating income.

Then we ened to deduct the Other expense from Operating income to get the income before tax expense. Then we need to calculate the Income tax expense.

Income tax expense = 500,000 x 40% = 200,000

Then deducting the Income tax expense to get the Net income.

And we need to calculate the Unrealized holding gains on investment securities, net of tax.

Unrealized holding gains on investment securities, net of tax = Unrealized holding gains on investment securities x (1-tax rate) = 84,000 x (1-40%) = 50,400

Then we need to deduct the Unrealized holding gains on investment securities, net of tax to get the Comprehensive income.

Next we need to calculate the Earnings per share. For that we need to divide the net income with the number of shares of common stock were outstanding

EPS = Net income / Number of shares of common stock were outstanding

= 300,000 / 1,400,000 = 0.21