Question

Presented below is information related to Diego Company for 2019: Note: All amounts listed are before taxes During 2019: • • Diego Company sold its fishing division to focus exclusively on its restaurant distribution operations. During 2019, there were 10,000 shares of common stock outstanding all year, and 5,000 shares of preferred stock outstanding all year 20% $(15,000) Income tax rate Cumulative effect of change in accounting principle* (* new principle would have reduced net income in the past) Understatement of Depreciation Expense in 2012-2017 (^ if correct, would have decreased net income in the past) Administrative expenses (10,000) Interest revenue Net Sales revenue Dividend revenue Interest expense Cost of goods sold Selling expenses Gain on the sale of Available-for-sale Securities Gain on the disposition of the fishing division Gain on operations of the fishing division Restructuring costs Loss on impairment of goodwill Holding gain on Available-for-sale Securities Dividends declared on common stock Dividends declared on preferred stock Retained earnings balance, Jan. 1, 2019 Accumulated Other Comprehensive Income, Jan. 1, 2019 Instructions: 50,000 15,000 987,000 40,000 60,000 550,000 100,000 8,000 25,000 75,000 38,000 13,000 22,000 50,000 25,000 90,000 30,000 Prepare a (1) multiple-step income statement, (2) statement of comprehensive income. (3) statement of retained earnings, and (4) compute the ending balance of Accumulated Other Comprehensive Income that would be shown on the Balance Sheet. When computing after-tax amounts, round to nearest whole dollar.

Answer 1

Particulars	Amount $	Amount $
Sales		987000
less cost of goods Sold		-550000
Gross profit		437000
Operating Expenses
Selling Expenses	100000
administrative Expenses	50000
Total Operating expenses		150000
Income from Operation(a)		287000
Non operating income
Dividend Income	40000
Interest Income	15000
Gain on sale of securties	8000
Gain on dispostion of fishing division	25000
(B)		88000
Non Operating Loss
Interest expense	60000
Loss on Impairement of Goodwill	13000
Restructing Cost	38000
Total net operating loss (c)		-111000
income befor Tax (a+b-c)		264000
Tax @ 20%		-52800
profit After tax net income		211200

2 Statement showing Statement of comprehensive Income of Diego

Partiiculars		Amount ($)
Net Income		211200
gain On operation Of Fishing Division from discontinued business	75000
TAx @20%	-15000
Add net gain from discontinued operation fishing		60000
Total profit after tax		271200
add other comprehensive Income
Holding Gain available of securities	22000	22000
Total Comprehensive income		293200

3 Retained earnings compute adjustment of those prior items which where computed wrongly in previous years

like in this wrong depreciation calculated , change in accounting policy so this will be adjusted here

Statement of retained earnings

Opening balance 90000

Add total profit after tax =271200

Less dividend payout for common stock = -50000

Less dividend payout for preference stock = -25000

Less cumilative effect of change in accounting policy = -15000

less unstated depreciation = -10000

closing balance of retained earnings = $261200

4 )accumlated  other comprehensive income =30000

add unrealized gain =22000

closing balance = 52000