Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 5, Problem 5.8P
Statement of Comprehensive Income Single-and Two-Statement Approaches. Tortarella Timber Company provided the following information for the current year
- 1. Operating income amounted to $345,000
- 2. The company sold investments in bonds at a pre-tax loss of $23,500
- 3. Tortarella reported a $5,600 unrealized loss on an available-for-sale portfolio that is included in other comprehensive income.
- 4. The company reported a $12,000 unrealized gam on its trading portfolio, which is included in net income
- 5. Tortarella committed to discontinue its retail lumber stores division on January 1 of the current year The retail lumber stores meet the criteria to be presented as a discontinued operation The retail lumber stores accounted for 15% of the company’s operating income. The stores were operated all year.
- 6. The retail lumber stores division was sold at December 31 of the current year for a $16,850 pre-tax loss. There was no gain or loss on remeasurement on January 1.
The company is subject to a 30% income tax rate.
Required
- a. Prepare a single statement of comprehensive income beginning with operating income.
- b. Prepare separate statements of net income and comprehensive income.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The most recent income statement of Marble Resurfacing, Inc. reported net sales of $23,600, EBIT of $6,836, taxable income of $5,260 and net income of $4,470. The firm paid $1,368 in dividends. The balance sheet reported current assets of $5,860, net fixed assets of $19,600, current liabilities of $2,470, long-term debt of $8,800, common stock of $10,000 and retained earnings of $4,190. The profit margin, the debt-equity ratio, and the dividend payout ratio for Marble Resurfacing are constant. Sales are expected to increase by $3,400 next year. What is the projected addition to retained earnings for next year?
Reporting a Comprehensive Income Statement
Wagner Inc. has service revenue of $1,200,000, operating expenses of $720,000, and an unrealized holding loss of $60,000 on debt security investments for the year ended December 31. Its income tax rate is 25%.
Required
a. Prepare a single continuous statement of comprehensive income. Ignore earnings per share disclosures.
• Do not use negative signs with any of your answers.
Wagner Inc.
Statement of Comprehensive Income
For the Year Ended December 31
Service revenue
Operating expenses
Income before income tax
Income tax expense
Net income
Unrealized holding loss on security investments, net of tax
Wagner Inc.
Income Statement
For the Year Ended December 31
Service revenue
Operating expenses
Income before income tax
Net income
+
+
Wagner Inc.
Statement of Comprehensive Income
For the Year Ended December 31
Unrealized holding loss on security investments, net of tax
Income before income tax
Comprehensive income
+
+ $
$
+
+
b. Prepare two…
Gympa reported on its income statement a net income $647,000 for the year ended December 31 before considering the following:
a. During the year, Gympa purchased trading securities
b. At year-end , the fair value of the investment portfolio was $50,000 lesshan the cost
c. The balance of Retained Earnings was $792,000 on January 1
d. Gympa paid $67,000 in cash dividends during the year.
Using the above data, calculate the balance of Retained Earnings on Decemeber 31.
Chapter 5 Solutions
Intermediate Accounting (2nd Edition)
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Discontinued Operations. Jojo, Inc. held a...Ch. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Prob. 5.16BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.19BECh. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Profitability Analyses. Use the following excerpt...Ch. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Prob. 5.6PCh. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.10PCh. 5 - Prob. 1JCCh. 5 - Financial Statement Analysis Case 1: Vertical...Ch. 5 - Prob. 2FSCCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
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
- Presented below are summary financial data from Pebble Company’s annual report: Assume that the Pebble Company is all equity financed. Calculate the following ratios for Years 1 and 2: Return on equity, Return on assets (levered), Return on sales (levered), Total asset turnover, Financial leveragearrow_forwardMellville Corporation provided the following partial-trial balance for the current yearPrepare a single-step income statement for the year ended December 31. Melville is subject to a 40% income tax rate Melville Corporation Trial Balance (Selected Accounts) For the Year Ended December 31 Account Debit Credit Dividends $1,400 Sales $120,000 Dividend Income 590 Interest Income 900 Gain on Disposal of Plant Assets 1,100 Unrealized Gain on Trading Investments 1,700 Cost of Goods Sold 45,000 Office Supplies Expense 4,100 Sales Salaries Expense 3,300 Selling Expenses 15,000 Accounting and Legal Fees—General Expense 830 Advertising Expense 3,800 Office Salaries Expense 6,600 Depreciation Expense—General Expense 9,400 Interest Expense 2,200 Loss on Asset Impairment 2,400 Revenue and Gains…arrow_forwardPrepare a single step income statement with respect to income from operations.arrow_forward
- Subject-accountarrow_forwardThe most recent financial statements for Anderson Company are shown here: Income Statement Balance Sheet Sales Costs $ 58,800 Current assets $ 28,800 24,800 Fixed assets 123,000 Long-term debt Equity $ 62,600 89,200 Taxable income $ 34,000 Total $151,800 Total $151,800 Taxes (21%) 7,140 Net income $ 26,860 Assets and costs are proportional to sales. Long-term debt and equity are not. The company maintains a constant 30 percent dividend payout ratio and a constant debt- equity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Maximum increase in salesarrow_forwardAn entity reported the following information during the first year of operations: Pretax financial income 9,000,000 Nontaxable interest received 1,000,000 Long-term loss accrual in excess of deductible amount 1,500,000 Tax depreciation in excess of financial depreciation 2,000,000 Income tax rate 30% What is the total tax expense?arrow_forward
- Calculating the Average Total Assets and the Return on Assets The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows. Also, assume a tax rate of 31%. Somerville CompanyIncome StatementFor the Year Ended December 31, 20X2 Amount Percent Net sales $8,281,989 100.0% Less: Cost of goods sold (5,383,293) 65.0 Gross margin $2,898,696 35.0 Less: Operating expenses (1,323,368) 16.0 Operating income $1,575,328 19.0 Less: Interest expense (50,000) 0.6 Income before taxes $1,525,328 18.4 Less: Income taxes (31%)* (472,852) 5.7 Net income $1,052,476 12.7 * Includes both state and federal taxes. Somerville CompanyStatement of Retained EarningsFor the Year Ended December 31, 20X2 Balance, beginning of period $1,979,155 Net income $1,052,476 Total $3,031,631 Preferred dividends (80,000) Dividends to common stockholders (201,887) Balance, end of period…arrow_forward1. The following is a data transaction from PT Colorpop's records as the basis for making a Statement of Comprehensive Income for the period ended 31 December 2020: Rent Revenue $ 44,000 Interest Expense $ 20,000 Unrealized gain on non-trading equity securities, net of tax $ 35,000 Selling expenses $ 140,000 Income tax $ 30,600 Administrative expenses $ 185,000 Cost of goods sold $ 500,000 Net sales $ 954,000 Loss on sale of plant assets $ 10,000 Loss from Fixed Assets Revaluation, net of tax $2,000 Instructions: Create a Statement of Comprehensive Income using a two-statement approach! Calculate the value of Ending Per Share for 2020 if the number of shares outstanding is 100,000 shares.arrow_forwardCurrent Attempt in Progress An inexperienced accountant for Ayayai Corp. showed the following in the income statement: net income $187,500 and unrealized gain on available-for-sale securities (before taxes) $85,000. The unrealized gain on available-for-sale securities is subject to a 25% tax rate. Prepare a correct statement of comprehensive income. AYAYAI CORP. Partial Statement of Comprehensive Income Income Before Income Taxes Net Income /(Loss) eTextbook and Media Save for Later taarrow_forward
- Provide answer this questionarrow_forwardBelow is Rodrigues Ltd's income statement and two balance sheets: Rodrigues Ltd Income Statement for year ending 30th June 2021 Sales COGS Operating expense Depreciation Interest expense Income before tax Tax at 30% Net income $m 600 240 100 40 10 210 63 147 Assets Current assets PPE Cost Accumul. depr. Carrying amount Total assets Rodrigues Ltd Balance Sheet as at 30th June Liabilities Current liabilities Non-current liabilities Owners' equity Retained earnings Contributed equity Total L and OE 2021 $m 98 800 140 660 758 60 130 80 488 758 2020 $m 73 920 100 820 893 50 120 100 623 893 Which of the following statements about the financial year from 30 June 2020 to 30 June 2021 is NOT correct? O a. The increase in net working capital (ANWC) was $15m. O b. Net capital expenditure was negative because in net terms, more property, plant and equipment (PPE) was bought rather than sold. O c. The increase in net working capital was positive largely because in net terms, more inventory was…arrow_forwardAccounting.?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License