Question

P4-1 (Multiple-Step Income, Retained Earnings) The following information is related to Dickinson Company for 2014.Retained earnings balance, January 1, 2014 $ 980,000Sales revenue 25,000,000Cost of goods sold 16,000,000Interest revenue 70,000Selling and administrative expenses 4,700,000Write-off of goodwill 820,000Income taxes for 2014 1,244,000Gain on the sale of investments (normal recurring) 110,000Loss due to fl ood damage—extraordinary item (net of tax) 390,00Loss on the disposition of the wholesale division (net of tax) 440,000Loss on operations of the wholesale division (net of tax) 90,000 Dividends declared on common stock $250,000Dividends declared on preferred stock 80,000Dickinson Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2014, there were 500,000 shares of common stock outstanding all year.InstructionsPrepare a multiple-step income statement and a retained earnings statement.

Answer 1

Income Statement :-

Particulars	Amount($)	Amount($)
Sales		25000000
Less : Cost of Goods Sold		(16000000)
Gross Profit		9000000
Less : Selling and Administrative Expenses		(4700000)
Income from Operatiions		4300000
Add : Other Revenues and Gains
Interest Revenue	70000
Gain on the sale of investments	110000	180000
Less : Other Expenses and Losses
Write off of Goodwill	(820000)	(820000)
Income From continuing operations before income tax		3660000
Less : Income Tax		(1244000)
Income from Continuing Operations		2416000
Less : Discontinued Operations
Loss on Operations, Net of Tax	90000
Loss on Disposal, net of tax	440000	(530000)
Income before extraordinary item		1886000
Less : Extraordinary item -
Loss from flood damage, Net of Tax		(390000)
Net Income		1496000

Earnings Per Share :-

Particulars	Amount($)	Amount($)
Income from Continuing Operations($2416000/500000)		4.83
Less : Discontinued Operations
Loss on Operations, Net of Tax ($90000/500000)	0.18
Loss on Disposal, Net of Tax ($440000/500000)	0.88	(1.06)
Income before extraordinary item		3.77
Less : Extraordinary Loss, Net of Tax ($390000/500000)		(0.78)
Net Income		2.99