Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 4, Problem 4.8P
Multiple-step statement of income and comprehensive income
• LO4–1, LO4–3, LO4–5, LO4–6
Duke Company’s records show the following account balances at December 31, 2018:
| Sales | $15,000,000 |
| Cost of goods sold | 9,000,000 |
| General and administrative expenses | 1,000,000 |
| Selling expenses | 500,000 |
| Interest expense | 700,000 |
Income tax expense has not yet been determined. The following events also occurred during 2018. All transactions are material in amount.
1. $300,000 in restructuring costs were incurred in connection with plant closings.
2. Inventory costing $400,000 was written off as obsolete. Material losses of this type are considered to be unusual.
3. It was discovered that depreciation expense for 2017 was understated by $50,000 due to a mathematical error.
4. The company experienced a negative foreign currency translation adjustment of $200,000 and had unrealized gains on investments of $180,000.
Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company’s effective tax rate on all items affecting comprehensive income is 40%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $3 million sinking fund payment on its debt. The
most recent industry average ratios and the firm's financial statements are as follows:
Industry Average Ratios
Current ratio
Debt-to-capital ratio
Times interest earned
EBITDA coverage
Inventory turnover
Cash and equivalents
Accounts receivables
Inventories
Total current assets
2x
17%
3 x
6 x
11 x
Days sales
outstandinga
Calculation is based on a 365-day year.
Balance Sheet as of December 31, 2021 (millions of dollars)
$78
Accounts payable
Other current liabilities
51
125
Notes payable
$ 254
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and equity
Gross fixed assets
Less depreciation
Net fixed assets
Total assets
15 days
Fixed assets turnover
Total assets turnover…
Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is
anxious to have prepared is a statement of cash flows. Financial statements for 2025 are provided below.
Cash
Accounts receivable
Inventory
Property, plant, and equipment
Less accumulated depreciation
Accounts payable
Income taxes payable
Bonds payable
Common stock
Retained earnings
COMPARATIVE BALANCE SHEETS
12/31/25
Sales revenue
$608000
(320000)
$408000
360000
384000
288000
$1440000
$176000
352000
360000
216000
336000
$1440000
INCOME STATEMENT
For the Year Ended December 31, 2025
12/31/24
$960000
(304000)
$8400000
$192000
216000
480000
656000
$1544000
$96000
392000
600000
216000
240000
$1544000
View Policies
Current Attempt in Progress
For Cullumber Company, the following information is available:
Cost of goods sold
$385000
Dividend revenue
14800
Income tax
expense
36500
Operating expenses
140000
Sales revenue
594000
In Cullumber's multīple-step income statement, gross profit
O should be reported at $209000.
O should be reported at $ 47300.
O should not be reported.
O should be reported at $223800.
Save for Later
Chapter 4 Solutions
Intermediate Accounting
Ch. 4 - The income statement is a change statement....Ch. 4 - What transactions are included in income from...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - What are restructuring costs and where are they...Ch. 4 - Define intraperiod tax allocation. Why is the...Ch. 4 - How are discontinued operations reported in the...Ch. 4 - What is meant by a change in accounting principle?...Ch. 4 - Prob. 4.10Q
Ch. 4 - The correction of a material error discovered in a...Ch. 4 - Define earnings per share (EPS). For which income...Ch. 4 - Prob. 4.13QCh. 4 - Describe the purpose of the statement of cash...Ch. 4 - Prob. 4.15QCh. 4 - Explain what is meant by noncash investing and...Ch. 4 - Distinguish between the direct method and the...Ch. 4 - Prob. 4.18QCh. 4 - Prob. 4.19QCh. 4 - Show the calculation of the following...Ch. 4 - Show the DuPont frameworks calculation of the...Ch. 4 - Prob. 4.22QCh. 4 - Prob. 4.23QCh. 4 - Prob. 4.1BECh. 4 - Multiple -step income statement LO41, LO43 Refer...Ch. 4 - Prob. 4.3BECh. 4 - Multiple -step income statement LO41, LO43 The...Ch. 4 - Prob. 4.5BECh. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Discontinued operations LO44 Refer to the...Ch. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Statement of cash flows; indirect method LO48 Net...Ch. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - Profitability ratios LO410 The 2018 income...Ch. 4 - Prob. 4.17BECh. 4 - Inventory turnover ratio LO410 During 2018, Rogue...Ch. 4 - Operating versus Nonoperating Income LO41 Pandora...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Income statement format; single step and multiple...Ch. 4 - Multiple-step continuous statement of...Ch. 4 - Income statement presentation LO41, LO45 The...Ch. 4 - Prob. 4.6ECh. 4 - Income statement presentation; discontinued...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Discontinued operations; disposal in subsequent...Ch. 4 - Earnings per share LO45 The Esposito Import...Ch. 4 - Comprehensive income LO46 The Massoud Consulting...Ch. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - IFRS; statement of cash flows LO48, LO49 Refer to...Ch. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Prob. 4.18ECh. 4 - Prob. 4.19ECh. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Statement of cash flows; direct method LO48 Refer...Ch. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Concepts; terminology LO41, LO42, LO43, LO44,...Ch. 4 - Inventory turnover; calculation and evaluation ...Ch. 4 - Evaluating efficiency of asset management LO410...Ch. 4 - Profitability ratios LO410 The following...Ch. 4 - Prob. 4.28ECh. 4 - Prob. 4.29ECh. 4 - Prob. 4.30ECh. 4 - Prob. 4.31ECh. 4 - Prob. 4.32ECh. 4 - Comparative income statements; multiple-step...Ch. 4 - Discontinued operations LO44 The following...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Restructuring costs; Discontinued operations;...Ch. 4 - Income statement presentation; Restructuring...Ch. 4 - Income statement presentation; Discontinued...Ch. 4 - Income statement presentation; statement of...Ch. 4 - Multiple-step statement of income and...Ch. 4 - Statement of cash flows LO48 The Diversified...Ch. 4 - Integration of financial statements; Chapters 3...Ch. 4 - Statement of cash flows; indirect method LO48...Ch. 4 - Calculating activity and profitability ratios ...Ch. 4 - Use of ratios to compare two companies in the same...Ch. 4 - Creating a balance sheet from ratios; Chapters 3...Ch. 4 - Prob. 4.15PCh. 4 - Interim financial reporting Appendix 4 Branson...Ch. 4 - Prob. 4.1BYPCh. 4 - Judgment Case 42 Restructuring costs LO43 The...Ch. 4 - Prob. 4.3BYPCh. 4 - Prob. 4.4BYPCh. 4 - Prob. 4.5BYPCh. 4 - Prob. 4.6BYPCh. 4 - Prob. 4.7BYPCh. 4 - IFRS Case 48 Statement of cash flows;...Ch. 4 - Judgment Case 49 Income statement presentation;...Ch. 4 - Prob. 4.10BYPCh. 4 - Integrating Case 412 Balance sheet and income...Ch. 4 - Prob. 4.13BYPCh. 4 - Prob. 4.17BYPCh. 4 - Prob. 4.18BYPCh. 4 - Continuing Cases Target Case LO43, LO44, LO46,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Problem I. The following data represent selected information from the comparative income statement and balance sheet for Little CPA Company for the years ended December 31, 2020 and 2019: 2020 2019 Net Sales (all on credit) P370,000 P333,000 Cost of goods sold 160,000 150,000 Gross profit 210,000 183,000 Income from operations 95,000 87,000 Interest expense 8,000 8,000 Net income 70,000 57,000 Cash 10,000 14,000 Accounts receivable, net 30,000 25,000 Inventory 43,000 40,000 Prepaid expenses 5,000 7,000 Total current assets 88,000 86,000 Total noncurrent assets 112,000 104,000 Total current liabilities 70,000 60,000 Total noncurrent liabilities 40,000 45,000 Ordinary share capital, no par* 60,000 60,000 Retained earnings 30,000 25,000 Note: 10,000 ordinary shares have been issued and outstanding since the company was established. They had a…arrow_forwardProblem I. The following data represent selected information from the comparative income statement and balance sheet for Little CPA Company for the years ended December 31, 2020 and 2019: 2020 2019 Net Sales (all on credit) P370,000 P333,000 Cost of goods sold 160,000 150,000 Gross profit 210,000 183,000 Income from operations 95,000 87,000 Interest expense 8,000 8,000 Net income 70,000 57,000 Cash 10,000 14,000 Accounts receivable, net 30,000 25,000 Inventory 43,000 40,000 Prepaid expenses 5,000 7,000 Total current assets 88,000 86,000 Total noncurrent assets 112,000 104,000 Total current liabilities 70,000 60,000 Total noncurrent liabilities 40,000 45,000 Ordinary share capital, no par* 60,000 60,000 Retained earnings 30,000 25,000 Note: 10,000 ordinary shares have been issued and outstanding since the company was established. They had a…arrow_forwardKORBIN COMPANY Comparative Income Statements For Years Ended December 31, 2019, 2018, and 2017 2019 2018 2017 Sales $ 459,716 $ 352,180 $ 244,400 Cost of goods sold 276,749 223,282 156,416 Gross profit 182,967 128,898 87,984 Selling expenses 65,280 48,601 32,261 Administrative expenses 41,374 30,992 20,285 Total expenses 106,654 79,593 52,546 Income before taxes 76,313 49,305 35,438 Income tax expense 14,194 10,108 7,194 Net income $ 62,119 $ 39,197 $ 28,244 KORBIN COMPANY Comparative Balance Sheets December 31, 2019, 2018, and 2017 2019 2018 2017 Assets Current assets $ 58,718 $ 39,300 $ 52,535 Long-term investments 0 500 4,280 Plant assets, net 109,047 99,561 58,646 Total assets $ 167,765 $ 139,361 $ 115,461 Liabilities and Equity Current liabilities $ 24,494…arrow_forward
- Current Attempt in Progress The comparative statements of Pharoah Company are presented here. Pharoah Company Income Statements For the Years Ended December 31 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations Other expenses and losses Interest expense Income before income taxes Income tax expense Net income 2025 $2,104,400 1,167,000 937,400 570.000 367,400 25.080 342,320 102,696 $239,624 2024 $1,960,000 1,146.840 813,160 546,060 267.100 22,800 244.300 73,290 $171.010 Assets Current assets Cash Debt investments (short-term) Accounts receivable (net) Inventory Total current assets Plant assets (net) Total assets Pharoah Company Balance Sheets December 31 Liabilities and Stockholders' Equity. Current liabilities Accounts payable Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity 2025 $68,514 84,360 134,292 143,640 430,806 739,860 $1,170,666 $182,400 49,590 231,990 250,800 482,790 2024…arrow_forwardIncome Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?arrow_forwardAssets Cash Debt investments (short-term) Accounts receivable (net) Inventory Prepaid expenses Land Priscoll Company Balance Sheets December 31 Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable (current) Accounts payable Accrued liabilities Bonds payable, due 2025 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity 2022 $ 70,000 55,000 104,000 230,000 25,000 130,000 260,000 $874,000 $170,000 65,000 40,000 250,000 200,000 149,000 $874,000 2021 $ 65,000 40,000 90,000 165,000 23,000 130,000 185,000 $698,000 $120,000 52,000 40,000 170,000 200,000 116,000 $698,000arrow_forward
- QUESTION 3 De Luna Bhd is a major retailer of branded cars in Peninsular Malaysia. The comparative Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income for De Luna Bhd as of 30 June 2019 are as follows: De Luna Bhd Statement of Financial Position As at 30 June 2019 2019 2018 RM'000 RM'000 Non-Current Assets Building Less: Accumulated depreciation 728,000 182,000 598,000 125,000 473,000 546,000 Current Assets Inventory Accounts receivable 252,000 107,000 282,000 90,000 39,000 52.000 463,000 Prepayment Cash 41,000 55.250 455.250 L001.250 Total current asset Total Assets 936,000 Equity Share capital Retained earnings Total equity 402,000 204.000 606.000 312,000 184.000 496.000 Long-Term liability Bond 102,000 132,000 Current liabili ties Accounts payable Salary payable Interest payable Total current liabilities 147,000 155,000 79,250 59.000 293.250 104,000 57.000 308.000 Total Liabilities Total Equity and Liabilities 0.000 936.000 395.250…arrow_forwardThe following are the financial statement JNC Ltd. for the year ended 31 March 2020: JNC Ltd. Income statement For the year ended 31 March 2020 $”M” Revenue 1276.50 Cost of sales (907.00) 369.50 Distribution costs (62.50) Administrative expenses (132.00) 175.00 Interest received 12.50 Interest paid (37.50) 150.00 Tax (70.00) Profit after tax 80.00 JNC Ltd. Statement of financial position as at 31 March 2020 2019 $”M” $”M” ASSETS: Non- current assets: Property, plant and equipment 190 152.5 Intangible assets 125 100 Investments 12.5 Current assets: Inventories 75 51 Receivables 195 157.5 Short-term investment 25 Cash in hand 1 0.5 Total assets 611 474 Equity and liabilities: Equity: Share capital (10 million ordinary shares of $ 10 per value) 100 75 Share premium 80 75 Revolution reserve 50 45.5 Retained earnings 130 90 Non-current liabilities: Loan 85 25…arrow_forwardK McDaniel and Associates, Inc. reported the following amounts on its 2024 income statement: Year Ended December 31, 2024 Net income Income tax expense Interest expense $ 22,950 6,600 3,000 What was McDaniel's times-interest-earned ratio for 2024? OA. 7.65 OB. 10.85 OC. 9.85 OD. 8.65 point(s) possible ...arrow_forward
- Atlantic Corporation reported the following financial statements: E (Click the icon to view the financial statements.) The company has 2,200 shares of common stock outstanding. What is Atlantic's earnings per share? (Round the earnings per share to two decimal places, X.XX. O A. $1.90 Financial Statements O B. $3.58 OC. $2.49 O D. 3.19 times Atlantic Corporation Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Assets Current Assets: Cash and Cash Equivalents 2,052 $ 1,655 Accounts Receivable 1,951 1,731 Merchandise Inventory 1,342 1,094 1,615 1,817 Prepaid Expenses Total Current Assets 6,960 6,297 18,240 16,174 Other Assets 2$ 25,200 $ 22,471 Total Assets Liabilities Current Liabilities 24 7.087 $ 8,158 4,698 3,844 Long-term Liabilities Total Liabilities 11,785 12,002 Stockholders' Equity Common Stock, no par 7,015 4,169 6,400 6,300 Retained Earnings Click to select your an Total Stockholders' Equity 13,415 10,469 24 25,200 $ 22,471 Clear Al All parts showing Total…arrow_forwardThe following information is available for Sunland Corporation for the year ended December 31, 2022: sales revenue $840,000, other revenues and gains $91,000, operating expenses $101,000, cost of goods sold $466,000, other expenses and losses $30,500, and preferred stock dividends $40,950. The company's tax rate was 20%, and it had 70,000 common shares outstanding during the entire year. (a) Your Answer Correct Answer Your answer is partially correct. Prepare a corporate income statement. (List other revenues before other expenses.)arrow_forwardUse the given statement of comprehensive income below in answering the question. DEF Company, Income Statement 2021 2020 Sales P10,200.00 P9,600.00 Cost of Goods Sold P3,000.00 P2,600.00 Gross Profit P7,200.00 P7,000.00 Operating Expenses P2,400.00 P2,200.00 Operating Profit P4,800.00 P4,800.00 Interest Expense P900.00 P800.00 Earnings before tax P3,900.00 P4,000.00 Income Tax P1,560.00 P1,600.00 Net Profit P2,340.00 P2,400.00 How many percent of the sales is the operating expenses in 2021 and 2020? A 8.82% and 8.33% 70.59% and 72.92% 29.41% and 27.08% 23.53% and 22.92%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License