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Chapter 4: 15E (page 186)

Roxanne Carter Corporation reported the following for 2017: net sales \(1,200,000, cost of goods sold \)750,000, selling and administrative expenses \(320,000, and an unrealized holding gain on available-for-sale securities \)18,000.

Instructions

Prepare a statement of comprehensive income, using (a) the one statement format and (b) the two statement format. (Ignore income taxes and earnings per share.)

Short Answer

Expert verified

The comprehensive income balance shows a balance of $148,000.

Step by step solution

01

Meaning of Comprehensive Income

Comprehensive income includes all the unrealizedand net income. It provides an overview of the company's income that is not fully reported on the income statement.

02

Preparing a statement of comprehensive income using one statement format

Roxanne Carter Corporation
Statement of Comprehensive Income
For the Year Ended 2017

Sales

$1,200,000

Cost of goods sold

750,000

Gross Profits

450,000

Selling and Distribution expenses

320,000

Net Income

130,000

Other Comprehensive Income

Unrealized holding Gains

18,000

Comprehensive Income

$148,000

03

Preparing the Income Statement using two statement format

Roxanne Carter Corporation
Income Statement
For the Year Ended 2017

Sales

$1,200,000

Cost of goods sold

750,000

Gross Profit

450,000

Selling and Distribution Expenses

320,000

Net Income

$130,000

Roxanne Carter Corporation
Statement of Comprehensive Income
For the Year Ended 2017


Net Income

$130,000

Unrealized holding Gain

18,000

Comprehensive Income

$148,000

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Most popular questions from this chapter

Which of the following is not reported in an income statement under IFRS?

(a) Discontinued operations.

(b) Extraordinary items.

(c) Cost of goods sold.

(d) Income tax.

On January 1, 2017, Richards Inc. had cash and common stock of \(60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2017, it purchased for cash \)20,000 of debt securities that it classified as available-for-sale. It received interest of \(3,000 during the year on these securities. In addition, it has an unrealized holding gain on these securities of \)4,000 net of tax. Determine the following amounts for 2017: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2017).

When does tax allocation within a period become necessary? How should this allocation be handled?

(Multiple-Step Statement) The following balances were taken from the books of Alonzo Corp. on December 31, 2017.

Interest revenue \(86,000 Accumulated depreciation equipment \)40,000

Cash \(51,000 Accumulated depreciation—buildings \)28,000

Sales revenue \(1,380,000 Notes receivable \)155,000

Accounts receivable \(150,000 Selling expenses \)194,000

Prepaid insurance \(20,000 Accounts payable \)170,000

Sales returns and allowances \(150,000 Bonds payable \)100,000

Allowance for doubtful accounts \(7,000 Administrative and general expense \)97,000

Sales discounts \(45,000 Accrued liabilities \)32,000

Land \(100,000 Interest expense \)60,000

Equipment \(200,000 Notes payable \)100,000

Buildings \(140,000 Loss from earthquake damage \)150,000

Cost of goods sold \(621,000 Common stock \)500,000

Retained earnings $21,000

Assume the total effective tax rate on all items is 34%.

Instructions

Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.

Cooper Investments reported an unusual gain from the sale of certain assets in its 2017 income statement. How does intra period tax allocation affect the reporting of this unusual gain?
See all solutions

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