Sales Cost of goods sold General and administrative expenses Selling expenses In

Question

Sales Cost of goods sold General and administrative expenses Selling expenses Interest expense 18,600,eee 1,168,00e 668,000 860,800 Income tax expense has not yet been determined. The following events also occurred during 2018. Al transactions are material in amount 1. $460,000 in restructuring costs were incurred in connection with plant closings 2. Inventory costing $560,000 was written off as obsolete. Material losses of this type are considered to be unusual. 3. It was discovered that depreciation expense for 2017 was understated by $66,000 due to a mathematical error 4. The company experienced a negative foreign currency translation adjustment of $360,000 and had unrealized gains on investments of $340,000 Required Prépare 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 1, 2018

Explanation / Answer

The depreciation expense error is a prior period adjustment and is not reported in theincome statement.

DUKE COMPANY Statement of Comprehensive Income For the Year Ended December 31, 2018 Sales revenue 18200000 Cost of goods sold -10600000 Gross profit 7600000 Operating expenses: Selling Expense -660000 General and administrative -1160000 Restructuring costs -460000 Loss from write-down of obsolete inventory -560000 Total operating expenses -2840000 Operating income 4760000 Other income (expense): Interest expense -860000 Income before income taxes 3900000 Income tax expense -1560000 Income After Tax 40% 2340000 Other comprehensive income (loss): Foreign currency translation adjustment loss, net of tax -360000 Unrealized gains on investment securities, net of tax 340000 Total other comprehensive loss -20000 Comprehensive income 2320000

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