Question

Comprehensive: Comparative Income Statements Tiger Company's accountant for the prepared comparative income statements for 2016 and 2017 as follows: Comparative Income Statements For Years Ended December 31 2017 2016 Sales Cost of goods sold Gross profit Operating expenses Operating income Other items Income before income taxes Income tax expense (30%) $ 3,500,000 (1,600,000) $ 1,900,000 (1,300,000) 5600,000 (200,000) $400,000 (120,000) $280,000 $4,600,000 (2,600,000) $2,000,000 (1,500,000) $500,000 100,000 $600,000 (180,000) $420,000 Net income The auditor of Tiger Company reviewed the accounting records and income statements and discovered the facts described in items 1 and 2 below. All amounts incurred during 2016 and 2017 are included in the preceding statements. 1. Included in the category Other Items" (along with other smaller miscellaneou a. A loss of $60,000 in 2016 that was considered to be both unusual and infrequent b. A $150,000 loss in 2017 from an unusually large write-down of inventory because of obsolescence C. A $250,000 gain in 2016 that was considered to be both unusual and infrequent 2. On July 1, 2017, Tiger has announced its intention to sell its backscratcher division. This division is considered a component of the company. Operating results for this division are included in the company's overall operating results for 2016 and 2017, as shown previously, and are as follows: 2017 2017 (7/1-12/31) (1/1-6/30) 2016 Sales $200,000 $400,000 $700,000 Cost of goods sold 300,000 320,000 290,000 Operating expenses 100,000 180,000 110,000 The division had not been sold by the end of 2017, so the company classified it as held for sale. The division consisted of the following items with book values and fair values on December 31, 2017: Item Book Value Fair Value Assets $720,000 450,000 $620,000 510,000 Liabilities Required: Prepare corrected comparative statements of income for 2017 and 2016 for the Tiger Company. Ignore earnings per share.

Answer 1

Preparation of corrected comparative statements of income for 2017 and 2016 for the tiger company.

Refer to the below images for the above asked question, in a detailed way of solution with calculations.

income statement for prepare corrected 2014 & 2016 for comparative Tiger Reajustement , Tiger company Comparative Income For the year ended statements pec 31 2016 $39000000 (2310000) $1590000 (1390000) $ 200600 - (60ooo) 250000 particolars 2017 Sales $2900000 cost of goods sold (980000) Gross profit & 1920000 operating expenses (1020000) operating income $ 900000 other items: - Loss from obselete inventory (150000) - unusual loss - Unusal gain - Miscellaneous (50000) Pretax income from continuing operations $ 700000 Income tax expense (30t.) (210000) Income from continuing operations $ 490000 Results from discontinued operations: - Income (loss) from operations of discontinued division (net of $90000 income tax credit in 2017 and 890060 income taxes in 2016 - Loss on write down of held for sale backscrather division (net of $48000 (112000) income tax credit) (90000) & 300000 (90000) $ 210000 210000 - Net income $ 168000 & 420000

Worllings: a $ 3500000 - $ 400 000 - $200000 b) 4600000 - 700000 c) & 1 600ooo - 1320000 300000 d) $2600000 - $290000 e) $ 1300000 - $ 180000 - 100000 f) & 1500 ooo - $ 110,000 9 $(2000 ) + 8 150000 (disclosed separate in same section but as a line item). b) $100000 + $ 6oooo (10ss) - $ 250000 (gain) ) [(4 400000 + $ 200.000) -($320000 + $ 300000)180000 + $ 100000)]x 70%. 3) (4700000 - $ 290000 - $ 110000) x 707 B) [$ 110000 ( 620000 - $ 510000) fais value - $ 270000(8720000 - $450000) book value] x 70t.