Question

2020 Spring ACTG 321 Assigned HW2: Income Satement Due date: 1/29 ( Wed.) in the beginning of class s homework assignment accounts for 5 points. No point will be given if it is incomplete or uue, in addition, no point will be given if most of your work is incorrect or the format is not followed. One point will be deducted per error. ed below is information related to ColorCity Inc. for year of 2019 (1/1/2019-12/31/2019). Income from operations of discontinued food departiment (pre-tax) Selling and administrative expenses Interest expenses Net Sales Dividends-Common stock Interest revenues Loss on disposal of discontinued food department (pre-tax) Cost of goods sold Dividends-Preferred stock Retained earnings, 1/1 60,000 1,114,000 140,000 3.790,000 56.000 260,000 120,000 1,780,000 125,000 630,000 Instructions 1. Prepare in good form a multiple-step income statement for the year 2019 for ColorCity Inc. Assume a 30% tax rate. Include an appropriate heading for the statement. All subtotals must be titled appropriately (e.g., gross profit, income from operation, etc.). Please note, the items given above are in scrambled order and not all items should be reported on an income statement. Illustration 4-19 (Poquito Industries Inc.) on the slide provides a good example of multi-step income statement. Please make your handwriting clear and neat. 2. Assume that 140,000 shares of common stock were outstanding during the year. Calculate earnings per share based on the net income figure at the bottom of the statement (round to two decimals). Show your work in addition to the answer

Answer 1

Income Statement of Colorcity Inc., for the year 2019

Particulars	Note to accounts	Amount ($)
Revenue from Operations	1	3,790,000
Other Income	2	260,000
Total Reveune		4,050,000
Expenses
Cost of Sales		1,780,000
Interest Expense		140,000
Selling & Administrative Expenses		1,114,000
Total expenses		3,034,000
Profit/Loss before Tax		1,016,000
Tax expense @ 30%		304,800
profit/Loss after tax from Continuing Operations		711,200
Profit/Loss after tax from Discontinuing operation	3	(78,000)
Profit/Loss for the Year		633,200
Earnings Per Share ($633,200/140,000 Shares)		4.52

Notes to Accounts:

1.Revenue from Operations

Net Sales 3,790,000

2. Other Income

Interest revenue 260,000

3. Profit/Loss from Discontinuing Operations

income from Discontinuing operations	$ 60,000
Loss on disposal of discontinued Food Dept	($ 120,0000
Total Income before tax	($ 60,000)
Tax Expense @ 30%	($ 18,000)
Profit/Loss after tax from discontinued operations	($ 78,000)