An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income...

An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income taxes $359,000 and unrealized gain on available-for-sale securities (before taxes) $88,800. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 28% tax rate. Prepare a correct statement of comprehensive income.

Expert Solution

SARASOTA CORP.
Partial Statement of Comprehensive Income
Income Before Income Taxes (a)	$359,000
Income Tax Expense [$359,000 x 28%] (b)	$100,520
Net Income / (Loss) (c = a - b)	$258,480
Other Comprehensive Income
Unrealized Holding Gain on Available-for-Sale Securities [Refer working note below] (d)	$63,936
Comprehensive Income (c + d)	$322,416

.

Working note - Calculation of unrealized gain on available-for-sale Securities, net of income taxes
Unrealized gain on available-for-sale securities (before taxes)	$88,800
Less: Income tax [$88,800 x 28%]	$24,864
Unrealized gain on available-for-sale Securities, net of income taxes	$63,936

ekkarill92 answered 1 year ago

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