P3-34) Prepare, in good form a) a statement of comprehensive income that include

ID: 2427902 • Letter: P

Question

P3-34) Prepare, in good form a) a statement of comprehensive income that includes net income and comprehensive income in one schedule, and b) a statement of changes in equity.

Accounts payable: $1,235,000
Accounts receivable: $2,860,000
Accumulated depreciation- equipment: $1,740,000
Accumulated depreciation- plant: $1,500,000
Cash: $1,009,800
Common shares: $15,000,000
Depreciation- equipment: $580,000
Depreciation- plant: $500,000
Equipment: $5,800,000
Income tax expense: $537,200
Income tax on income from discontinued operations: $200,000
Interest expense: $165,000
Inventories: $645,000
Land- cost: $5,000,000
Land- revaluation adjustment: $3,000,000
Long-term debt: $3,500,000
Loss from discontinued operations: $500,000
Other comprehensive income- gain on land revaluation: $3,000,000
Plant: $10,000
Raw materials used:$4,670,000
Retained earnings: $1,834,000
Salaries and wages: $7,210,000
Sales: $15,344,000
Utilities expense: $876,000

Explanation / Answer

Statement of comprehensive income:

Sales

$ 15,344,000

Less: Raw materials used

$ (4,670,000)

Gross Profit

$ 10,674,000

Less: Operating Expenses:

Salaries and wages

$ 7,210,000

Utilities expense

$ 876,000

Depreciation- equipment

$ 580,000

Depreciation- plant

$ 500,000

Interest expense

$ 165,000

$ (9,331,000)

Income from continuing operations before income tax

$ 1,343,000

Less: Income tax expense

$ (537,200)

Income from continuing operations

$ 805,800

Discontinued Operations:

Loss from discontinued operations

$ (500,000)

Less: Income tax on income from discontinued operations

$ 200,000

Loss on Discontinued Operations

$ (300,000)

Net income

$ 505,800

Other comprehensive income- gain on land revaluation

$ 3,000,000

Comprehensive income

$ 3,505,800

Statement of changes in equity:

Common shares

$ 15,000,000

Retained earnings

$ 1,834,000

Beginning Equity

$ 16,834,000

Add: Comprehensive income

$ 3,505,800

Ending Equity

$ 20,339,800