Question

Green Ltd., a publicly traded company, has compiled the following information at their
December 31, 20X8 year-end.
Account Balance ($)
Sales revenue $49,265,000
Revaluation gain (loss) on PP&E $43,200
Interest income $81,800
Loss on disposal of net assets from discontinued operations $68,000
Dividend revenue $63,000
Income (loss) from discontinued operations $134,000
Cost of goods sold $26,641,000
Dividends declared $20,000
Selling expenses $614,000
Administrative expenses $921,000
Gain on disposal of equipment $52,000
Accumulated other comprehensive income $251,000
Retained earnings $41,625,400
Green’s tax rate is 25% on all items.
Required:
(a) Prepare a multi-step statement of income and comprehensive income in good form.
Ignore EPS.
(b) In 20X9 (the following year), Green sells property held at fair value. The recycling
model is not used for these types of gains. The after-tax realized gain on disposal
was $40,000. How will this gain be recognized? Show journal entry.
(c) What amount of Retained Earnings and AOCI will show on Green Ltd.'s Balance Sheet at December 31, 20X8

Answer 1

23 24 25 26 49,265,000 26,641,000 22,624,000 27 28 29 614,000 921,000 30 31 1,535,000 21,089,000 32 33 Green Ltd. Multi-Step Income Statement Sales Revenue Less Cost of revenues Gross Profit Less Operating Expenses Selling expenses Administrative expenses Total Operating Expenses Operating Income (EBIT) Other Incomes and expenses) Interest income Gain on disposal of equipment Dividend revenue Earnings before income taxes Taxes @25% Income from Continuing Operations Discontinued Operations Loss on disposal of net assets from discontinued operations, net of taxes Income (loss) from discontinued operations, net of tax Net Income 34 35 81,800 52,000 63,000 36 37 196,800 21,285,800 5,321,450 15,964,350 38 39 40 41 -51,000 100,500 42 49,500 16,013,850 43 44

45 46 16,013,850 47 Statement of Comprehensive Income Net Income Other Comprehensive Income (or Loss), net of Tax Revaluation gain (loss) on PP&E,net of tax Total Other Comprehensive Income (Loss) Comprehensive Income 48 32,400 49 32,400 16,046,250 50 51 52 b) 53 54 In 20X9 (the following year), Green sells property held at fair value. The recycling model is not used for these types of gains. The after-tax realized gain on disposal was $40,000. How will this gain be recognized? Show journal entry. 55 40,000 56 57 Income Summary Realized Gain on disposal of Property 40,000 58 59 C) 60 61 What amount of Retained Earnings and AOCI will show on Green Ltd.'s Balance Sheet at December 31, 20X8 AOCI Total 62 Retained Earnings 41,625,400 63 64 251,000 16,046,250 Beginning Balance Comprehensive Income Less Dividend Ending Balance 41,876,400 16,046,250 -20,000 57,902,650 65 -20,000 41,605,400 66 16,297,250