Question

The following income statement items appeared on the adjusted trial balance of Foxworthy Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $21,600; cost of goods sold, $14,150; selling expenses, $2,230; general and administrative expenses, $1,130; dividend revenue from investments, $130; interest expense, $230. Income taxes have not yet been accrued. The company’s income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount.

1. Investments were sold during the year at a loss of $230. Foxworthy also had unrealized holding losses of $130 for the year on investments.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,300.
3. During the year, Foxworthy completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP regarding discontinued operations. The division had incurred operating income of $730 in 2018 prior to the sale, and its assets were sold at a loss of $1,940.
4. A positive foreign currency translation adjustment for the year totaled $670.

Required:

Prepare Foxworthy’s single, continuous statement of comprehensive income for 2018, including earnings per share disclosures. Use a multiple-step income statement format. Two million shares of common stock were outstanding throughout the year. (Enter your answers in thousands of dollars, except earnings per share. Amounts to be deducted should be indicated with a minus sign. Round EPS answers to 2 decimal places.)

Answer 1

FOXWORTHY MANUFACTURING CORPORATION
Statement of Comprehensive Income
For the Year Ended December 31, 2018
($ in 000s)
Sales revenue	21,600
Cost of goods sold	14,150
Gross profit		7,450
Operating expenses:
Selling expenses	2,230
General and administrative expenses	1,130
Restructuring costs	1,300
Total operating expenses		4,660
Other income (expense):		2,790
Loss on Sale of Investments	(230)
Interest expenses	(230)
Dividend revenue	130
Total Other income (expense)		(330)
Income from continuing operations before income taxes		2,460
Income tax expense		984
Income from Continuing Operations before Extraordinary Items		1,476
Discontinued operations:
Income from operations of Discontinued Component (including loss on disposal of $1,940)	(1,210)
Income tax benefit	484
Loss from Discontinued Operations		(726)
Income before Extraordinary Item		750
Loss from Expropriation (Net of $ tax benefit)		-
Net Income		750
Other Comprehensive Income:
Unrealized Loss from Investments (Net of $52 Tax)	(78)
Gain from foreign currency Translation (Net of $268 Tax)	402	324
Comprehensive Income		1,074
Earnings per share:
Income from continuing operations	0.74
Discontinued operations	(0.36)
Extraordinary loss	-
Net income	0.38