Question

PROBLEM AAA: DICKINSON COMPANY (50 points) The following information is related to Dickinson Company for 2020. Retained earnings balance, January 1, 2020 $980,000 Gain on the sale of investments 110,000 Net sales 25,000,000 Cost of goods sold 16,000,000 Loss on disposal of wholesale division 550,000 Interest revenue 70,000 Loss on operations of wholesale division 112,500 Selling and administrative expenses 4,700,000 Dividends declared on common stock 250,000 Write off of goodwill 820,000 Dividends declared on preferred stock 81,000 Loss due to flood damage 390,000 Effective tax rate on all items is 20% to discontinue its entire wholesale operations and to retain their Dickinson Company decided to discontinue its entire wholesale manufacturing operations. On July 1, Martin sold the wholesale Oper sold the wholesale operations to Rogers Company. s of common stock outstanding all year. statement for 2020 (in good form). 500 and that income of $118,750 was omitted in Instructions a. Prepare a multiple-step income statement for 2020 (in go b. Assuming net income for 2020 is $2,053,500 and that in error from the 2019 income statement, prepare a for 2020

Answer 1

Dickinson Company
Income Statement
For the Year Ended December 31, 2020
Net Sales		$25,000,000
Cost Of Goods Sold		($16,000,000)
Gross Profit /(Loss)		$9,000,000
Selling And Administrative Expenses		($4,700,000)
Income From Operations		$4,300,000
Other Revenue And Gains
Interest Revenue	$70,000
Gain On The Sale Of Investments	$110,000
		$180,000
Other Expenses And Losses
Write-Off Of Goodwill	($820,000)
Loss From Flood Damage	($390,000)
		($1,210,000)
Income From Continuing Operations Before Income Tax		$3,270,000
Income Tax @20%		($654,000)
Income From Continuing Operations		$2,616,000
Discontinuing Operations
Loss On Operations, Net Of Applicable Tax (a) ((-112500)+(112500*20%)	($90,000)
Loss On Disposal, Net Of Applicable Tax (b) (-550000)+(550000*20%)	($440,000)
		($530,000)
Net Income (Loss)		$2,086,000
Earnings Per Share:
Income From Continuing Operations (2616000-81000)/500000		5.07
Discontinuing Operations
Loss On Operations, Net Of Applicable Tax (a/500000)	($0.18)
Loss On Disposal, Net Of Applicable Tax (b/500000)	($0.88)
		($1.06)
Net Income (Loss)		$4.01

Dickinson Company
Retained Earnings Statement
For the Year Ended December 31, 2020
Beg Bala on 1 Jan		$980,000
Add: Prior Period Adjustmnet		$118,750
Add: Net income (loss)		$2,053,500
		$3,152,250
Less:
Dividends-Preferred stock	($81,000)
Dividends-Common stock	($250,000)
		($331,000)
Ending Balance on 31 Dec		$3,483,250