Question

Chapter 4 Problem #1 KT Retailing Company has the following information for 2019. [Dollar amounts given are pre-tax.] Division A was discontinued during the last quarter. Assume qualifies as discontinued operations . Regarding dividends: declaration date is 12/21/19, record date is 01/02/20, & payment date is 01/08/20. Loss on sale of investments, $17,000 Rent revenue, $1,000 Advertising expense, $75,000 Utilities expense, S9,500 . Sales returns and allowances, $6,000 Interest revenue, $8,000 Depreciation expense, $42,000 Dividends to common stockholders, $7,000 Dividends to preferred stockholders, $9,000 Cost of goods sold, S800,000 Salaries expense, S105,000 Loss on disposal of Division A, $50,000 Rent expense, $6,500 . . .Sales revenue, $2,010,000 .Weighted average number of shares of common stock outstanding, 100,000 Weighted average number of shares of preferred stock outstanding, 18,000 Interest expense, S19,000 Gain on sale of equipment, $1,500 Tax rate, 20% .Sales discounts, $4,000 Income from operations of Division A, $15,000 Delivery expense, S2,000 Dividend revenue, $3,000 Prepare KT's 2019 multiple-step Income Statement in good form, with applicable EPS disclosures. Round all other dollar Round per share dollar amounts to the nearest cent [Le. to 2 decimal places]. amounts to the nearest whole dollar as applicable. You may pass on sub-classification of selling vs. administrative.

Answer 1

KT Retailing Company		Income Statement
Revenue		2019
	Gross sales	$                 2,010,000
	(Less sales returns, Discounts, and allowances)	$                     (10,000)
	Net Sales	$                 2,000,000
Cost of Goods Sold
	Cost of Goods Sold	$                     800,000
	Gross Profit (Loss)	$                 1,200,000
Expenses
Selling Expense
	Advertising	$                       75,000
Administrative Expense
	Rent	$                         6,500
	Salaries and wages	$                     105,000
	Delivery Expense	$                         2,000
Other
	Depreciation	$                       42,000
	Dividends to common stock holders	$                         7,000
	Dividends to Preference stock holders	$                         9,000
	Utilities	$                         9,500
	Loss on Sale of Investments	$                       17,000
	Loss on Disposal of Division A	$                       50,000
	Total Operating Expenses	$                     323,000
Operating Income (Loss)		$                     877,000
	Non-operating revenues, expenses, gains, losses
	Rent	$                         1,000
	Interest	$                         8,000
	Gain On Sale of Equipment	$                         1,500
	Income from operation of Division A	$                       15,000
	Dividend Revenue	$                         3,000
	(Less interest expense)	$                     (19,000)
	Income Before Taxes	$                     886,500
	(Less income tax expense) (Income Before Taxes * 20 %)	$                  (177,300)
Net Income		$                     709,200