Question

Saved te thiz Pc Stacey Chue O Tell me what you want to do Share AaBbCCEReplace mal 1 No Spac.. Heading 1 Heading2 Title S Subtitle Select - Styles Editing Required: For each of the three additional facts listed in the additional information, discuss the appropriate presentation of the item described. Do not prepare a revised statement. P-8 Maltiple-step statement of income and comprebemsive income Duke Company's records show the following account balances at December 31, 2018: Sales $15,000,000 Cost of goods sold General and administrative expenses 1.000.000 Selling expenses Interest expense Income tax expense has not yet been determined. The following events also occurred during 2018. All transactions are material in amount. 9,000,000 500,000 700,000 $300,00o in restructuring costs were incurred in connection with plant closings. 2. Inventory costing $40o,oo0 was written off as obsolete. Material losses of this type are considered to be unusual. 3. It was discovered that depreciation expense for 2017 was understated by $50,000 due to a mathematical error 4. The company experienced a negative foreign currency translation adjustment of $200,000 and had unrealized gains on investments of $180,00o. Required Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company's effective tax rate on all items affecting comprehensive income is 40%. Each component of other comprehensive income should be displayed net of tax Ignore EPS disclosures.

Answer 1

Duke Company
INCOME STATEMENT
For the Year Ended December 31, 2018
Sales		15,000,000
Cost of goods sold:		($9,000,000)
Gross profit on sales (a)		6,000,000
Less:Operating expenses:
Selling expenses	($500,000)
General and administrative expenses	($1,000,000)
Restructuring Cost	($300,000)
Written off obsolete inventory	($400,000)
Total operating expenses (b)		($2,200,000)
Operating income (a-b)		3,800,000
Other revenue and expense:
Less:Interest expense		($700,000)
Income before taxes and extraordinary item		3,100,000
Income tax @40%		1,240,000
Income before extraordinary item		1,860,000
Less: Extraordinary item		$ -
Net income		1,860,000
Other Comprehensive income (loss)
Foreign currency translation adjustment loss	($200,000)
Unrealized gains on investment securities	($180,000)
Net Other Comprehensive income (loss)		($380,000)
Comprehensive income (loss)		1,480,000
Note:- Depreciation expense for 2017 was understated by $50,000 due to a mathematical error is the prior period adjustment so it will not be reported in the income statement.