Question

Exercise 4-9 Presented below is information related to Ivan Calderon Corp. for the year 2017, Net sales Cost of goods sold Selling expenses Administrative expenses Dividend revenue Interest revenue $1,300,000 780,000 65,000 48,000 20,000 7,000 Write-off of inventory due to obsolescence Depreciation expense omitted by accident in 2016 Casualty loss Cash dividends declared Retained earnings at December 31, 2016 Effective tax rate of 34% on all items $80,000 55,000 50,000 45,000 980,000 Prepare a multiple-step income statement for 2017. Assume that 60,000 shares of common stock are outstanding. (Round earni IVAN CALDERON CORP. Income Statement For the Year Ended December 31, 2017 Revenue Net Sales 1300000 Cost of Goods Sold 780000 Gross Profit/ (Loss) 520000 Operating Expenses

Answer 1

IVAN CALDERON CORP. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 2017
Net sales		1300000
less:cost of goods sold		780000
Gross profit		520000
operating expense
selling expense	65000
Administrative expense	48000
Total operating expense		113000
Income from operations		407000
Other revenue and gain
Dividend revenue	20000
Interest revenue	7000
		27000
Other expenses and losses
Write off of inventory due to obsolescence		-80000
casualty loss		-50000
Income before tax		304000
less:Income tax expense [304000*34%]		- 103360
Net income		200640
Earning per share [200640/60000]		$ 3.34

b)

IVAN CALDERON CORP. RETAINED EARNING STATEMENT FOR THE YEAR ENDED DECEMBER 31 2017
Retained earning ,December 31,2016	980000
Depreciation expense omitted,net of tax [-55000(1-.34]	-36300
Adjusted retained earning	943700
Add:	200640
Net income	1144340
less:cash dividend declared	-45000
Retained earning ,December 31,2017	1099340