The following selected account balances were taken from the trial balance of Dal

ID: 2340622 • Letter: T

Question

The following selected account balances were taken from the trial balance of Dallas Corporation as of June 30, 2018. All accounts have normal balances.

Sales $1,678,500

Sales Discounts 31,150

Common Stock 1,300,000

Salaries Expense – Sales 61,110

Depreciation Expense – Office Furniture 7,250

Equipment 880,360

Travel Expense – Sales 28,930

Freight-Out (Delivery Costs) 21,400

Depreciation Expense – Sales Equipment 4,980

Retained Earnings, July 1, 2017 2,450,000

Utilities Expense – Office 9,130

Wage Expense – Office 136,700

Interest Expense 18,990

Miscellaneous Expense -- Office 6,000

Dividend Revenue 38,000

Allowance for Doubtful Accounts 45,000

Cost of Goods Sold 1,043,845

Additional Information:

In March, 2018, the corporation discontinued the operations of its publishing division (a major component of its business). During the current fiscal year, the publishing division had an operating loss of $110,000 and its assets were sold at a gain of $890,400.

The corporation had a $20,000 loss on the sale of a manufacturing facility (not related to the discontinued publishing division).

The tax rate which applies to all items is 30%.

There were 80,000 shares of common stock outstanding throughout the year.

Instructions: On the next two pages, fill in the yellow highlighted spaces to complete the multiple-step income statement for Dallas Corporation for the year ended June 30, 2018.

Explanation / Answer

Please note that operating profit does not include operating loss of discounting of division.

Dallas corporation

Income statement

For the year ended June 30, 2018

Sales

1,678,500

Less: Sales Discounts

31,150

Less: sales return

Net sales

1,647,350.00

Less: cost of goods sold

1,043,845.00

Gross profit

603,505.00

Less: operating expenses

Selling expenses

Salaries Expense – Sales

61,110

Travel Expense – Sales

28,930

Freight-Out (Delivery Costs)

21,400

Depreciation Expense – Sales Equipment

4,980

116,420.00

Administrative expenses

Depreciation Expense – Office Furniture

7,250

Utilities Expense – Office

9,130

Wage Expense – Office

136,700

Miscellaneous Expense -- Office

6,000

159,080.00

Total operating expenses

275,500.00

Operating income

328,005.00

Non-operating income

Interest Expense

(18,990)

Loss on the sale of a manufacturing facility

(20,000)

Dividend Revenue

45,000

Total Non-operating income

6,010.00

Income from continuous operation before tax

334,015.00

Less: tax expense @ 30%

100,204.50

Income from continuous operation

233,810.50

Income from Discontinued Operations:

Income (loss) from Operations of Segment (net of tax) (-110000*70%)

-77000

Income from Disposal of Segment (net of tax) (890400*70%)

623280

Income from Discontinued Operations

546,280.00

Net income

780,090.50

Earnings per share without Income from Discontinued Operations (233810.50/80000)

$ 2.92

Earnings per share with Income from Discontinued Operations (780090.50/80000)

$ 9.75