PROBLEMS P4-1 (103,4,6) (Multiple-Step Statement, Retained Earnings Statement) T

Question

PROBLEMS P4-1 (103,4,6) (Multiple-Step Statement, Retained Earnings Statement) The following information is related to Dickinson Company for 2017 Retained earnings balance, January 1, 2017 $980,000 Sales revenue Cost of goods sold Interest revenue Selling and administrative expenses Write-off of goodwill Income taxes for 2017 Gain on the sale of investments Loss due to flood damage Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 9o,000 Dividends declared on common stock Dividends declared on preferred stock 25,000,000 16,000,000 70,000 4.700,000 820,000 1,244,000 110,000 390,000 $250,000o 80,000 Dickinson Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15. Diekinson sold the wholesale operations to Rogers Company. During 2017, there were 500,000 shares of common stock outstanding all year. Instructions Prepare a multiple-step income statement and a retained earnings statement.

Explanation / Answer

Multiple Income statement Sales Revenue $25,000,000 Cost of Good sold 16000000 Gross profit $9,000,000 Selling and Admionistrative expenses 4700000 Income from operation $4,300,000 Other Revenue & Gains Interest revenue 70000 Gain on sale of Investment 110000 180000 Other expenses and losses Write off goodwill 820000 Income from continuing operation before Income Yax $3,660,000 Income Tax 1244000 Income from continuing operation $2,416,000 Discontinued operations Loss on operations, net of taxes 90000 Loss on disposal net of tax 440000 530000 Income before extraordinaryitem $1,886,000 Extraoedinary item -loss from flood 390000 Damage net of taxes Net Income $1,496,000 EPS (2416000-80000/500000) $4.67 Income from continuing operations Discountinued operation Loss on operation net of taxes -0.18 Loss on disposal net of taxes -0.88 -1.06 Income before extraordinaryitem (1886000-80000)/500000 3.61 Extraordinary loss net of taxes (390000/500000) -0.78 Net Income (1496000-80000)/500000 2.83 Retained Earning statement Retained Earning January 1 $980,000 Net Income $1,496,000 $2,476,000 Less:" Dividend Common stock 250000 preferred stock 80000 330000 Retained eranings, Dec 31 $2,146,000

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