Question

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Presented below is information related to Marigold Corp. for the year 2020. Net sales $1,118,000 Write-off of inventory due to obsolescence $68,800 Cost of goods sold 670,800 Depreciation expense omitted by accident in 2019 47,300 Selling expenses 55,900 Casualty loss 43,000 Administrative expenses 41,280 Cash dividends declared 38,700 Dividend revenue 17,200 Retained earnings at December 31, 2019 842,800 Interest revenue 6,020 Effective tax rate of 20% on all items

Answer 1

Marigold Corp
Income Statement
Net Sales		$1,118,000
Cost of Goods Sold		$670,800
Gross Profit		$447,200	($1118000-$670800)
Operating Expenses
Selling Expenses	55900
Administrative Expenses	41280	$97,180	($55900+$41280)
Income from Operations		$350,020	($447200-$350020)
Other Revenues and Gains
Dividend Revenue	17200
Interest Revenue	6020	$23,220	(%17200+$6020)
		$373,240	($350020+$23220)
Other Expenses and Losses
Write off of inventory due to
Obsolecence		$68,800
Income before taxes and extraordinary item		$304,440	($373240-$68800)
Income Taxes		$60,888	($304440*20%)
Income before extraordinary item		$243,552	($304440-$60888)
Extraordinary item
Casualty Loss	$43,000
Less: Applicable Tax reduction	$8,600	$34,400	($43000+$8600)
Net Income		$209,152	($243552-$34400)
Per share of common stock
Income before extraordinary item		$3.73
($243552/65360)
Extraordinary item (net of tax)		($0.53)
Net Income (209152/65360)		$3.20
Marigold Corp
Retained Earning Statement
Balance Jan 1 as reported		$842,800
Correction for overstatement of net income in prior period		($37,840)
(depreciation error) (net of tax $ 9460)
Balance Jan 1 as adjusted		$804,960
Add: Net Income		$209,152
Less: Dividend declared		($38,700)
Balance Dec 31		$170,452