Question

2019 Spring ACTG 321 Assigned HW2: Income SatementDue date: 2/6 (Wed.) in the beginning of class Name: . Note: This homework assignment accounts for 5 points. No point will be given if it is incomplete or past due. In addition, no point will be given if most of your work is incorrect or the format is not followed. One or more points will be deducted if part of the statement is not correctly prepared .Presented below is information related to ColorCity Inc. for the year of 2018 (1/1/2018-12/31/2018).

Income from operations of discontinued food departiment (pre-tax) 60,000

Selling expenses 340,000

Interest expenses 140,000

Net Sales 3,790,000

Dividends-Common stock 56,000

Administrative expenses 774,000

Interest revenues 260,000

Loss on disposal of discontinued food department (pre-tax) 120,000

Cost of goods sold 1,780,000

Dividends-Preferred stock 125,000

Retained earnings, 1/1 630,000

Clear writing is required.InstructionsPrepare in good form a multiple-step income statement for the year 2018 for ColorCity Inc. Assume a 30% tax rate and that 140,000 shares of common stock were outstanding during the year. Include an appropriate heading for the statement. All subtotals should be titled appropriately. Also determine earnings per share based on the net income figure at the bottom of the statement (round to two decimals). That is, you don't need to show per share information for different components. Please note, the items given above are in scrambled order and not all items should be reported on an income statement. Illustration 4-19 on textbook provides a good example of income statement. Please study the example before you do the assignment.

Answer 1

COLORCITY INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2018
Sales revenue		$ 37,90,000.00
Cost of Good Sold		$ 17,80,000.00
Gross Profit		$ 20,10,000.00
Selling Expenses	$ 3,40,000.00
Administrative Expenses	$ 7,74,000.00	$ 11,14,000.00
Income from operation		$   8,96,000.00
Other Revenue and expense
Interest Revenue	$ 2,60,000.00
Interest Expense	$ 1,40,000.00	$   1,20,000.00
Income from continuing operation before income tax		$   7,76,000.00
Income tax @ 30%		$   2,32,800.00
Income from continuing operation		$   5,43,200.00
Discontinued operations
Income from operations of Food Department , less applicable income tax of =18000 (60000 x 30%)	$    42,000.00
Loss on disposal of Food Department , Less applicable income tax of 36000(120000 x30%)	$    84,000.00	$    -42,000.00
Net Income		$   5,01,200.00
Earning Per share = $501200/140000 shares		$               3.58