Question

Question 1:   
The following is trial balance of Sigma Corp. at December 31, 2019.

Sigma Corporation
Trial Balance
December 31, 2019
Account Titles Debit Credit
Cash    685,000
Accounts Receivable 1,695,000
Inventory 2,185,000
Equipment 8,600,000
Accounts payable 1,610,000
Salaries payable 360,000
Common stock 1,600,000
Additional paid-in capital 3,390,000
Retained earnings 3,350,000
Net sales-Regular 10,900,000
Net sales-Plastics (discontinued) 2,100,000
Cost of goods sold- Regular 5,800,000
Cost of goods sold-Plastics (discontinued) 1,250,000
Loss on sale of equipment-Regular 60,000
Selling expenses-regular 1,400,000
Administrative expenses-regular 1,200,000
Selling expenses-Plastics (discontinued) 440,000
Administrative expenses-Plastics (discontinued) 220,000
Interest revenue-Regular 75,000
Gain on disposal of plastics division (discontinued) 150,000
Total 23,535,000 23,535,000

Additional information: On October 31, 2019 Sigma Corporation sold its plastics Division for $2,950,000 when the carrying amount was $2,800,000. For financial statement reporting, this sale was considered a sale of discontinued operation.

Instructions
Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. A preferred dividend totaling 55 000 was approved for the year (EPS) . Ignore income tax

Answer 1

Multistep Income Statement of Sigma Corp. for the period ended December 31, 2019

Partculars	Amount ( in $)	Amount ( in $)
Income from Continued Operations
Net Sales (A)		10,900,000
Cost of goods sold (B)		(5,800,000)
Gross Profit (C=A-B)		5,100,000
Operating expenses
Selling expenses		1,400,000
Administrative expenses		1,200,000
Total operating expenses(D)		2,600,000
Operating income (E=D-C)		2,500,000
Non-operating
Interest revenue		75,000
Loss on sale of equipment		(60,000)
Total non-operating (F)		15,000
Total Income from Continued Operations (G=E+F)		2,515,000
Discontinued Ooerations
Income from discontinued operations		190,000
Gain on sale of discontinued operations		150,000
Net Income from discontinued operations (H)		340,000
Net Income (I=G+H)		2,855,000

Working of operating income from discontinued operations

Net Sales $2,100,000

Cost of goods sold ( $1,250,000)

Selling expenses ($440,000)

Administrative expenses ($220,000)

Income from discontinued operations $190,000