The following information is related to Stellar Company for 2017. Retained earni

Question

The following information is related to Stellar Company for 2017. Retained earnings balance, January 1, 2017 $993,230 Sales Revenue 26,284,300 Cost of goods sold 16,139,200 Interest revenue 79,400 Selling and administrative expenses 4,749,600 Write-off of goodwill 824,400 Income taxes for 2017 1,303,600 Gain on the sale of investments 119,300 Loss due to flood damage 397,000 Loss on the disposition of the wholesale division (net of tax) 451,900 Loss on operations of the wholesale division (net of tax) 88,730 Dividends declared on common stock 264,100 Dividends declared on preferred stock 87,850 Stellar Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Stellar sold the wholesale operations to Rogers Company. During 2017, there were 492,800 shares of common stock outstanding all year. Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g. 1.49.) STELLAR COMPANY Income Statement $ $ $ : $ $ $ SHOW LIST OF ACCOUNTS Prepare a retained earnings statement. (List items that increase retained earnings first.) STELLAR COMPANY Retained Earnings Statement $ : : $ $ Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Multiple- Step Income Statement STELLAR COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales Revenue $26,284,300 Cost of Goods Sold $16,139,200 Gross Profit $10,145,100 Operating Expenses Selling and Administrative Expenses $4,749,600 Income From Operations $5,395,500 Other Revenue and Gains Interest Revenue $79,400 Gain on Sale of Investments $119,300 $198,700 Other Expenses and Losses Write off of Goodwill $824,400 Income before taxes and extraordinary items $4,769,800 Income Taxes $1,303,600 Income from Continuing Operations $3,466,200 Discountinued Operations Loss on operations, net of tax $88,730 Loss on Disposition, net of tax $451,900 $540,630 Income before extraordinary items $2,925,570 Extraordinary item - Loss due to flood damage $397,000 Net Income $2,528,570 Earnings per share Income from continuing operations ($3466200-$87850)/492800 6.86 3378350 Discountinued operations Loss on operations, net of tax $88730/492800 ($0.18) Loss on Disposition, net of tax $451900/492800 ($0.92) ($1.10) Income before extraordinary item $5.76 ($2925570-$87850)/492800 Extraordinary loss $397000/492800 ($0.81) Net Income ($2528570-$87850)/492800 $4.95 STELLAR COMPANY RETAINED EARNINGS STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Retained Earnings, January 1 $993,230 Add : Net Income $2,528,570 Less : Dividends Preferred Stock $87,850 Common Stock $264,100 $351,950 Retained Earnings, December 31 $2,176,620

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