Question

Duke Company's records show the follow accounts balance at December 31, 2021

Sales Revenue	$ 15,000,000
Cost of goods sold	9,000,000
General and Administrative expense	1,000,000
Selling expense	500,000
Interest expense	700,000

Income tax expense has not yet been determined. the following events also occurred during 2021. all transactions are material in amount.

1. $300,000 in restructuring costs were incurred in connection with plant closings.

2. inventory costing $400,000 was written off as obsolete. Material losses of this type are considered to be unusual.

3. it was discovered that depreciation expense for 2020 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 an unrealized gain on debt in securities of $180,000

Required:

Prepare a single, continuous multiple-step statement of comprehensive income for 2021. The company's effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures. use a multiple-step format.

Answer 1

DUKE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31,2021
Particulars	Amount in $	Amount in $
Sales Revenue		15,000,000
Less : Cost of Goods Sold		9,000,000
Gross Profit		24,000,000
Operating Expenses
Selling Expenses	500,000
Administrative Expenses	1,000,000
Restructuring Cost	300,000
Loss from Inventory Written Off	400,000
Less : Total Operating Expenses		-2,200,000
Operating Income		26,200,000
Less : Interest Expense		-700,000
Income Before Taxes		25,500,000
Less : Income Tax Expenses
Net Income		25,500,000
Other Comprehensive Income/(Loss), Net of Tax
Foreign Currency Translation Adjustment, (Net of Tax)	-150,000		(200,000*(1-0.25)) = 150,000	Tax Rate is 25%
Unrealised Gains	135,000		(180,000*(1-0.25)) = 135,000
Total Other Comprehensive Income/(Loss), Net of Tax		-15,000
Total Comprehensive Income		25,485,000