Duke Company\'s records show the following account balances at December 31, 2018

Question

Duke Company's records show the following account balances at December 31, 2018: Sales Cost of goods sold General and administrative expenses Selling expenses Interest expense $16,600,000 9,800,000 1,080,000 580,000 780,000 ncome tax expense has not yet been determined. The following events also occurred during 2018. All transactions are material in amount. 1. $380,000 in restructuring costs were incurred in connection with plant closings. 2. Inventory costing $480,000 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 $58,000 due to a mathematical error. 4. The company experienced a negative foreign currency translation adjustment of $280,000 and had unrealized gains on investments of $260,000. Required Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company's effective tax rate on all items affecting comprehensive income is 20%. 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.)

Explanation / Answer

Particulars Amount Amount Sales 16,600,000 Less: COGS 9,800,000 Gross profit 6,800,000 Less: Operating expenses: General and administrative expenses 1,080,000 Selling expenses 580,000 Restructuring costs 380,000 Loss from write-­down of obsolete inventory 480,000 Total operating expenses 2,520,000 Net Operating income 4,280,000 Other income (expense): Interest expense 780000 Income before income taxes and extraordinary item 3,500,000 Income tax expense 700000 Income before extraordinary item 2,800,000 Extraordinary item gain (loss): Foreign currency translation adjustment loss, net of tax -224000 Unrealized gains on investment securities, net of tax 208000 Tottal Extraordinary Item -16000 Comprehensive income 2,784,000 Foreign Currency Transalationadjustement, Net of Tax $280000 (1-0.20)=$224000 Unadjustement gain or imvestment, net of tax $260000(1-0.20)=$208000

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