Learning Materials
Features
Discover
Chapter 4: Question 37Q (page 180)
How should the disposal of a component of a business be disclosed in the income statement?
Disclosure of a disposed component is based upon its nature, i.e., continued or discontinued.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Tim Mattke Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Mattke changed its inventory pricing to FIFO. The pretax income data is reported below.
Year Weighted Average FIFO
2015 \(370,000 \)395,000
2016 390,000 \(430,000
2017 410,000 \)450,000
Instructions
Show comparative income statements for Tim Mattke Company, beginning with income before income tax, as presented on the 2017 income statement.
(Multiple-Step Statement with Retained Earnings Statement) Presented below is information related to Ivan Calderon Corp. for the year 2017.
Net sales $1,300,000 Write-off of inventory due to obsolescence 80,000
Cost of goods sold 780,000 Depreciation expense omitted by accident in 2016 55,000
Selling expenses 65,000 Casualty loss 50,000
Administrative expenses 48,000 Cash dividends declared 45,000
Dividend revenue 20,000 Retained earnings at December 31, 2016 980,000
Interest Revenue 7,000
Effective tax rate of 34% on all items
Instructions
Presented below is information related to Viel Company at December 31, 2017, the end of its first year of operations.
Sales revenue \(310,000
Cost of goods sold \)140,000
Selling and administrative expenses \(50,000
Gain on sale of plant assets \)30,000
Unrealized gain on available-for-sale investments \(10,000
Interest expense \)6,000
Loss on discontinued operations \(12,000
Dividends declared and paid \)5,000
Instructions
Compute the following: (a) income from operations, (b) net income, (c) comprehensive income, and (d) retained earnings balance at December 31, 2017. (Ignore income tax effects.)
Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:
Cost of goods sold \)330,000
Salaries and wages expense 120,000
Income tax expense 25,000
Increase in value of company reputation 15,000
Other operating expenses 10,000
Unrealized gain on value of patents 20,000
Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.
The following information was taken from the records of Roland Carlson Inc. for the year 2017: income tax applicable to income from continuing operations \(187,000, income tax applicable to loss on discontinued operations \)25,500, and unrealized holding gain on available-for-sale securities (net of tax) \(15,000.
Gain on sale of equipment \)95,000 Cash dividends declared $150,000
Loss on discontinued operations75,000 Retained earnings January1,2017 600,000
Administrative expenses 240,000 Cost of goods sold 850,000
Rent revenue 40,000 Selling expenses 300,000
Loss on write-down of inventory 60,000 Sales revenue 1,900,000
Shares outstanding during 2017 were 100,000.
Instructions
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App