Question

Duke Company’s records show the following account balances at December 31, 2021:

Sales revenue	$	15,200,000
Cost of goods sold		9,100,000
General and administrative expense		1,010,000
Selling expense		510,000
Interest expense		710,000

Income tax expense has not yet been determined. The following events also occurred during 2021. All transactions are material in amount.

1. $310,000 in restructuring costs were incurred in connection with plant closings.
2. Inventory costing $410,000 was written off as obsolete. Material losses of this type are considered to be unusual.
3. It was discovered that depreciation expense for 2020 was understated by $51,000 due to a mathematical error.
4. The company experienced a negative foreign currency translation adjustment of $210,000 and had an unrealized gain on debt securities of $190,000.

Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2021. The company’s effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Sales Revenue		15,200,000.00
Cost of Goods Sold		9,100,000.00
Gross Profit		6,100,000.00
Operating Expenses
General and Administrative	1,010,000.00
Selling	510,000.00
Restructuring Costs	310,000.00
Inventory Write‐down Loss	410,000.00
Total Operating Expenses		2,240,000.00
Income from Operations		3,860,000.00
Other Income (Expense)
Interest Expense		-       710,000.00
Income Before Taxes and Extraordinary Items		3,150,000.00
Tax Expense (25%)		-       787,500.00
Net Income		2,362,500.00
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment Loss	-     157,500.00
Unrealized Gain on Investment Securities	142,500.00
Total Other Comprehensive Loss		-          15,000.00
Comprehensive Income		2,347,500.00