Question

Presented below is information related to Burge Corp., for the year ending December 31,2020. Net sales $1,950,000 Cost of goods sold 1,200,000 Selling expenses 95,000 Administrative expenses 70,000 Dividend revenue 30,000 Interest revenue 20,000 Interest expense 45,000 Write-off of goodwill due to impairment 75,000 Depreciation expense omitted in 2015 105,000 Dividends declared 120,000 Effect on prior years of change in accounting principle (credit) 220,000 Loss from operations of discontinued component of business 240,000 Gain from disposal of component of business 300,000 Federal tax rate of 30% on all items Prepare a multiple-step income statement for 2020. Assume the following for common stock during 2020: • Beginning common shares totaled 150,000 shares • July 1 issue a 2 to 1 stock split • September 1 purchased 50,000 shares of treasury stock.

Answer 1

Burge Corp
INCOME STATEMENT
For the Year Ended December 31, 2020
Net Sales		1,950,000.00
Cost of Goods Sold		1,200,000.00
Gross Profit		750,000.00
Operating Expenses
Selling Expenses	95,000.00
Administrative expenses	70,000.00	165,000.00
Income from operations		585,000.00
Other revenues and gains
Dividend revenue	30,000.00
Interest revenue	20,000.00	50,000.00
		635,000.00
Other expenses and losses
Interest expense	45,000.00
Loss due to write-off of goodwill	75,000.00	120,000.00
Income before income tax		515,000.00
Income taxes		154,500.00
Income from continuing operations		360,500.00
Discontinued operations
Loss from operations of discontinued component ofbusiness (net of $72,000 income tax effect)	- 168,000.00
Gain from disposal of component of business(net of $90,000 income tax effect)	210,000.00	42,000.00
Net income		402,500.00