Question

On January 1, 2018, Jammin’ Company owns 40 percent (40,000 shares) of Benji, Inc., which it purchased several years ago for $364,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $587,200. Excess patent cost amortization of $24,000 is still being recognized each year. During 2018, Benji reports net income of $684,000 and a $240,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Jammin’ sold 8,000 shares of Benji on August 1, 2018, for $186,000 in cash. However, Jammin’ retains the ability to significantly influence the investee.

Required:

Prepare the following financial statements for Jammin in good form for the year ended 2018 using the following summarized data for 2018 that the Assistant Controller gave you:

Description	Amount
Sales	$1,700,000
Cost of Goods Sold	600,000
Other Expenses	416,000
Dividends Paid	300,000
Retained Earnings, 1/1/18	468,000

1. Income statement for Jammin’ Company. Please show calculations so that partial credit can be granted.
2. Statement of comprehensive income for Jammin’ Company. Please show calculations so that partial credit can be granted.
3. Statement of retained earnings for Jammin’ Company. Please show calculations so that partial credit can be granted.

Answer 1

Jammin compan (a) Income statement Particulars Revenue: Sales revenue Other income Total revenue Expenses: Cost of goods sold other expenses Total expenses EBITDA Amortization and depreciation Profit after tax Tax expenses profit for the year (1) Amount (S) Amount (S) 1,700,000 S 1,700,000 600,000 S 1,016,000 684,000 $24.000 660,000 (b) Comprehensive income statement Comprehensive loss (2) Total comprehensive income for the year(1) (2) S 420,000 (c) Retaind earnings Retaind earnings Earnings after tax Dividend paid Retained earnings (closing $ 468,000 660,000 300,000 balance S 828,000