Question

Joe Schreiner, controller for Flounder Company Inc., recently prepared the company's income statement and statement of changes in equity for 2020. Schreiner believes that the statements are a fair presentation of the company's financial progress during the current period, but he also admits that he has not examined any recent professional pronouncements on accounting. $ 357,000 193,000 164,000 FLOUNDER COMPANY INC. Income Statement For the Year Ended December 31, 2020 Sales revenues Cost of goods sold Gross profit Selling expenses 40,710 Administrative expenses 30,000 Income before income tax Other revenues and gains Unrealized gain on FV-OCl equity investments Dividend revenue 70,710 93,290 36,400 40,400 170,090 51,027 $ 119,063 Income tax expense Net income

Please help! Stuck with the final numbers shown highlighted in red. Green highlighted cells means they're correct.

Answer 1

Solution

1)

Sales Revenue		$357,000
Less: Cost of Goods Sold		$(193,000)
Gross Profit/ (Loss)		$164,000
Selling Expenses	$ 40,710
Administrative Expenses	$ 30,000
		$70,710
Operating Income		$ 93,290
Other Revenues $ Gains:-
Gain on disposal of long term investments	$ 32,600
Dividends Revenue	$40,400
		$ 73,000
		$ 166,290
Total Other Expenses $ Losses
Loss on Expropriation		$(14,200)
Income Before Income Tax		$152,090
Income Tax Expense (30% of $152,090)		$45,627
Net Income / (Loss)		$106,463
Total Other Comprehensive Income
Unrealized Gain on FV-OCI Investments ($36,400-30%0f $36,400)		$25,480
Comprehensive Income		$131,943

2)

Statement of Changes in Equity

Retained Earnings	Accumulated Other Comprehensive Income	Comprehensive Income
Balance January1, as Reported	$212,000	$100,000
Correction of Prior Year Error(Net of Tax)	$(19,119)
Balance January 1 Restated	$192,881	$100,000
Net Income / (Loss)	$119,063		$119,063
Unrealized Gain on FV-OCI Investments		$25,480	$25,480
Total Comprehensive Income			$144,543
Balance , December 31	$311,944	$125,480

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