Question

The adjusted trial balance of Trammell Corporation for the fiscal year ended December 31, 2019 contains the following:

Gain on sale of investments	45,000
Cost of goods sold	1,200,000
Deferred revenue	50,000
Interest payable	5,000
Sales returns	20,000
General and administrative expenses	100,000
Sales	2,100,000
Interest expense	40,000
Accounts receivable	200,000
Selling expenses	125,000
Restructuring expenses	20,000

During the year, Trammell adopted a plan to sell one of its divisions. The division is being held for sale as of December 31, 2019. On that date, the net book value of the division is $200,000 and the fair value is $225,000. The division has an operating loss of $55,000 for the fiscal year.

Trammell’s income tax rate is 25%.

Required: Based on the information provided, prepare a multiple-step income statement by hand on the back of this sheet of paper.

Whittaker, Inc. has net income of $400,000 for the fiscal year ended June 30, 2019. In addition, the company has both an unrealized holding gain on investments of $50,000 and a loss on foreign currency translation adjustment of $20,000. The company’s income tax rate is 30%.

Required: Based on the information provided, prepare a statement of comprehensive income by hand in the space provided below.

Answer 1

2,100,000 20,000 2,080,000 1,200,000 880,000 Trammell Corporation Income Statement For the Year Ended December 31, 2019 Sales revenue Less Sales Returns Net Sals Cost of goods sold Gross profit Operating expenses: Selling expenses General and administrative expenses Restructuring costs Total Operating Expenses Operating Income Other Revenues and expenses Gain on sale of investments Interest expense Income from continuing operations before income taxes Income tax expense Income from continuing operations 125,000 100,000 20.000 245,000 635,000 45,000 (40,000) 5,000 640,000 160,000 480,000

Discontinued operations Loss from operations of discontinued component (225000-200000-55000) Income tax Benefit Loss on discontinued operations Net Income (30,000) 7,500 (22,500) 457,500

400000 Whittaker Inc. Statement of Comprehensive Income Net Income Foreign Currency translation adjustment loss,net of tax (-20000 +20000 *30%) Unrealized gain on investment,net of tax (50000 - 50000 *30%) Total Other Comprehensive Income Comprehensive Income - 14000 35000 21000 421000