Question

The following selected account balances were taken from the trial balance of Dallas Corporation as of June 30, 2018. All accounts have normal balances.

Sales                                                                      $1,678,500

Sales Discounts                                                            31,150

Common Stock                                                       1,300,000

Salaries Expense – Sales                                             61,110

Depreciation Expense – Office Furniture                      7,250

Equipment                                                                 880,360

Travel Expense – Sales                                               28,930

Freight-Out (Delivery Costs)                                       21,400

Depreciation Expense – Sales Equipment                     4,980

Retained Earnings, July 1, 2017                             2,450,000

Utilities Expense – Office                                             9,130

Wage Expense – Office                                             136,700

Interest Expense                                                          18,990

Miscellaneous Expense -- Office                                  6,000

Dividend Revenue                                                       38,000

Allowance for Doubtful Accounts                              45,000

Cost of Goods Sold                                                 1,043,845

Additional Information:

In March, 2018, the corporation discontinued the operations of its publishing division (a major component of its business). During the current fiscal year, the publishing division had an operating loss of $110,000 and its assets were sold at a gain of $890,400.

The corporation had a $20,000 loss on the sale of a manufacturing facility (not related to the discontinued publishing division).

The tax rate which applies to all items is 30%.

There were 80,000 shares of common stock outstanding throughout the year.

Instructions: On the next two pages, fill in the yellow highlighted spaces to complete the multiple-step income statement for Dallas Corporation for the year ended June 30, 2018.

Answer 1

Please note that operating profit does not include operating loss of discounting of division.
Dallas corporation
Income statement
For the year ended June 30, 2018
Sales	1,678,500
Less: Sales Discounts	31,150
Less: sales return
Net sales		1,647,350.00
Less: cost of goods sold		1,043,845.00
Gross profit		603,505.00
Less: operating expenses
Selling expenses
Salaries Expense – Sales	61,110
Travel Expense – Sales	28,930
Freight-Out (Delivery Costs)	21,400
Depreciation Expense – Sales Equipment	4,980	116,420.00
Administrative expenses
Depreciation Expense – Office Furniture	7,250
Utilities Expense – Office	9,130
Wage Expense – Office	136,700
Miscellaneous Expense -- Office	6,000	159,080.00
Total operating expenses		275,500.00
Operating income		328,005.00
Non-operating income
Interest Expense	(18,990)
Loss on the sale of a manufacturing facility	(20,000)
Dividend Revenue	45,000
Total Non-operating income		6,010.00
Income from continuous operation before tax		334,015.00
Less: tax expense @ 30%		100,204.50
Income from continuous operation		233,810.50
Income from Discontinued Operations:
Income (loss) from Operations of Segment (net of tax) (-110000*70%)	-77000
Income from Disposal of Segment (net of tax) (890400*70%)	623280
Income from Discontinued Operations		546,280.00
Net income		780,090.50
Earnings per share without Income from Discontinued Operations (233810.50/80000)		$                   2.92
Earnings per share with Income from Discontinued Operations (780090.50/80000)		$                   9.75