Question

Terwilliger Corporation owns a number of cruise ships and a chain of hotels. The hotels, which have not been profitable, were discontinued on September 1, 2017. The 2017 operating results for the company were as follows.

Operating revenues...................................$12,850,000

Operating expenses.......................................8,700,000

Operating income........................................$ 4,150,000

 

Analysis discloses that these data include the operating results of the hotel chain, which were operating revenues $1,500,000 and operating expenses $2,400,000. The hotels were sold at a gain of $200,000 before taxes. This gain is not included in the operating results. During the year, Terwilliger had an unrealized loss on its available-for-sale securities of $600,000 before taxes, which is not included in the operating results. In 2017, the company had other revenues and gains of $100,000, which are not included in the operating results. The Corporation is in the 30% income tax bracket.

 

Instructions

Prepare a statement of comprehensive income.

Answer 1

TERWILLIGER CORPORATION STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31,2017
operating revenue (12850000-1500000)		11350000
operating expense (8700000-2400000)		6300000
Income from operations		5050000
Other revenue and expense		100000
Income before income tax		5150000
less Income tax expense		-1545000 (5150000*30%)
Income from continuing operations		3605000
Income from discontinued operations
Gain on sale of hotel chains ,net of taxes [200000(1-.30)=	140000
Loss from discontinued operations [ 1500000-2400000][1-.30]	-630000
		-490000
Net income		3115000
Comprehensive income
Unrealized loss on available for sale securities [-600000(1-.30)]		-420000
Total comprehensive income		2695000

TERWILLIGER CORPORATION STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31,2017
operating revenue (12850000-1500000)		11350000
operating expense (8700000-2400000)		6300000