The income statement for Delta-tec Inc. for the year ended December 31, 2016, wa
ID: 2497477 • Letter: T
Question
The income statement for Delta-tec Inc. for the year ended December 31, 2016, was as follows:
Delta-tec Inc.
Income Statement (selected items)
For the Year Ended December 31, 2016
1
Income from operations
$299,700.00
2
Gain on sale of investments
17,800.00
3
Less unrealized loss on trading investments
72,500.00
4
Net income
$245,000.00
The balance sheet dated December 31, 2015, showed a Retained Earnings balance of $825,000. During 2016, the company purchased trading investments for the first time at a cost of $346,000. In addition, trading investments with a cost of $66,000 were sold at a gain during 2016. The company paid $65,000 in dividends during 2016.
Delta-tec Inc.
Income Statement (selected items)
For the Year Ended December 31, 2016
Explanation / Answer
Solution for Part A
Statement of Retained earings for the year Ended on 31-dec-2016
Reatined Earings As on 31-Dec-2015 = $825,000
Add: Earnings during the year = $245,000
Less: Dividends Paid During the year = $65,000
Reatined earning as on 31-Dec-2016 = $1,005,000
Solutions for Part B
Calculation of total Trading investments held on Balance Sheet Date
Purchases during the Year = $346,000
Less: Sold During the Year = $66,000
Closing Stock of Investments = $280,000 (At Cost)
Less: Unleasied loss = $72,500
Value of Investment = $207,500
On the Balance sheet date, All investments are taken at Net Realizable Value. However, Cost value of Investment is also considered for the purpose of Presentation which will be reflected in inner coloumn of Balance Sheet to provide fair veiw of Trading Investments held during the year
Extracts of Balance sheet As on 31.dec.2016
Investments Trading Investments $280,000 $207,500Related Questions
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