Question

The following information is related to Concord Company for 2020.

Retained earnings balance, January 1, 2020		$960,400
Sales Revenue		24,500,000
Cost of goods sold		15,680,000
Interest revenue		68,600
Selling and administrative expenses		4,606,000
Write-off of goodwill		803,600
Income taxes for 2020		1,219,120
Gain on the sale of investments		107,800
Loss due to flood damage		382,200
Loss on the disposition of the wholesale division (net of tax)		431,200
Loss on operations of the wholesale division (net of tax)		88,200
Dividends declared on common stock		245,000
Dividends declared on preferred stock		78,400

Concord Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Concord sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year.

Prepare a multi step income statement and retained earnings statement

Answer 1

$24,500,000 $15,680,000 $8,820,000 Concord Company Statement of Retained Earnings For The Year Ended December 31, 2020 Retained Earnings, January 1, 2020 $960,400 Add: Net Income $1,387,680 [Ref: Workings] Less: Dividends $245,000 Common dividends] Net Increase in Retained Earnings $1,142,680 Retained Earnings, December 31, 2020 $2,103,080 $4,606,000 $4,214,000 Workings: Concord Company Multi-Step Income Statement For The Year Ended December 31, 2020 Sales revenue Less: Cost of goods sold Gross profit Expenses: Selling and administrative expenses Income from operation Other revenues and expenses: Interest revenue $68,600 Write-off of goodwill $803,600 Gain on sale of investment $107,800 Total other revenues & expenses Income before income taxes Income tax expense Income from continuing operation Discontinued operation: Loss on disposition of wholesale division $431,200 Loss on operation of wholesale division $88,200 Total discontinued operation Income before extraordinary items Loss due to flood damages extra ordinary item Net Income Net Income Less: Dividends to preferred stockholders Net income retained for common stockholders $1,466,080 [Ref: Income Statement] $78,400 $1,387,680 $627,200 $3,586,800 $1,219,120 $2,367,680 $519,400 $1,848,280 $382,200 $1,466,080