Question

Problem 4-01 The following information is related to Windsor Company for 2020. Retained earnings balance, January 1, 2020 Sales Revenue Cost of goods sold Interest revenue Selling and administrative expenses Write-off of goodwill Income taxes for 2020 Gain on the sale of investments Loss due to flood damage Loss on the disposition of the wholesale division (net of tax) Loss on operations of the wholesale division (net of tax) Dividends declared on common stock Dividends declared on preferred stock $1,019,200 26,000,000 16,640,000 72,800 4,888,000 852,800 1,293,760 114,400 405,600 457,600 93,600 260,000 83,200 Windsor Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Windsor sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year.

Answer 1

WINDSOR COMPANY Income statement For the Year Ended December 31,2020 Sales Revenue Cost of Goods sold Gross Profit/(Loss) Selling and administrative expenses Income from operations Other Revenues and Gains Interest Revenue $ Gain on the sale of investments $ $ 26,000,000 $ 16,640,000 $ 9,360,000 $ 4,888,000 $ 4,472,000 72,800 114,400 $ 187,200 $ 4,659,200 Other Expenses and losses Write-off of goodwill Loss from Flood Damage $ $ 852,800 405,600 $ 1,258,400 $ 3,400,800 $ 1,293,760 $ 2,107,040 Income from continuing operations before income tax Income Tax Income from Continuing operations Discountinued operations Loss on Disposal , Net of Applicable Tax Loss on Operations, Net of Applicable Tax $ $ 457,600 93,600 $ 551,200 $ 1,555,840 Net Income /(Loss)

$ 4.05 Earning Per share Income from continuing operations Discontinued Operations Loss on Disposal , Net of Applicable Tax Loss on Operations, Net of Applicable Tax $ $ 0.92 0.19 $ 1.10 2.95 Net Income $ WINDSOR COMPANY Statement of Retained Earnings For the Year Ended December 31,2020 Retained Earnings, January 1 Add: Net Income $ 1,019,200 $ 1,555,840 $ 2,575,040 Less: Dividends - Preferred Stock Dividends - Common stock Retained Earnings , December 31 $ $ 83,200 260,000 $ 343,200 $ 2,231,840 Working Notes : Income from continuing operations = ($2,107,040-$83,200)/500,000 = $4.05 Los on disposal, Net of applicable Tax = $457,600/500,000 = $0.92 Los on opeartions, Net of applicable Tax = $93,600/500,000= $0.19 Net Income = ($1,555,840-$83,200)/500,000= $2.95