In: Accounting
Duke Company’s records show the following account balances at
December 31, 2018:
Sales | $ | 18,200,000 |
Cost of goods sold | 10,600,000 | |
General and administrative expenses | 1,160,000 | |
Selling expenses | 660,000 | |
Interest expense | 860,000 | |
Income tax expense has not yet been determined. The following
events also occurred during 2018. All transactions are material in
amount.
Required:
Prepare a single, continuous multiple-step statement of
comprehensive income for 2018. The company’s effective tax rate on
all items affecting comprehensive income is 40%. Each component of
other comprehensive income should be displayed net of tax. Ignore
EPS disclosures. (Amounts to be deducted should be
indicated with a minus sign.)
DUKE COMPANY | ||
Statement of Comprehensive Income | ||
For the Year Ended December 31, 2018 | ||
Sales | $ 18,200,000 | |
Less: Cost of goods sold | $ 10,600,000 | |
Gross profit | $ 7,600,000 | |
Less: Operating expenses | ||
General and administrative expenses | $ 1,160,000 | |
Selling expenses | $ 660,000 | |
Restructuring costs | $ 460,000 | |
Write-down of obsolete inventory | $ 560,000 | |
Total operating expenses | $ 2,840,000 | |
Operating income | $ 4,760,000 | |
Add: Non-operating Income (Expense) | ||
Interest expense | $ (860,000) | |
Income before income taxes and extraordinary item | $ 3,900,000 | |
Income tax @ 40% | $ 1,560,000 | |
Income before extraordinary item | $ 2,340,000 | |
Add (Loss): extraordinary item (if any) | $ 0 | |
Net income | $ 2,340,000 | |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment loss, net of 144000 tax benefits (360000*40% = 144000) (360000-144000) | $ (216,000) | |
Unrealized gains on investment securities, net of 136000 tax (340000*40% =1 36000) (340000-136000) | $ 204,000 | |
Total other comprehensive income (loss) | $ (12,000) | |
Comprehensive Income | $ 2,328,000 | |
Please note that prior period depreciation expense is not reported in the income statement. |