Answer:
a. Single-step Income Statement for the year ended December 31, 2020:
Sales Revenue $2,128,000
Rent revenue 44,800
Gain on sale of equipment 106,400
Total Revenue $2,279,200
Cost of goods sold 952,000
Administrative expenses 268,800
Selling expenses 336,000
Loss on write-down
of inventory 67 200
Total expenses $1,624,000
$655,200
Income Tax $209,440
Net Income $445,760
Comprehensive Income Statement for the year ended December 31, 2020:
Net Income $445,760
Loss on discontinued operations (84,000)
Income Tax
on discontinued operations (28,560)
Unrealized holding gain (net of taxes) 16,800
Comprehensive Income $350,000
Statement of Retained Earnings for the year ended December 31, 2020:
Retained earnings January 1, 2020 $2,400,000
Comprehensive Income 350,000
Cash dividends declared (168,000)
Retained earnings, December 31 $2,582,000
Step-by-step explanation:
a) Data and Calculations:
Income tax applicable to income from continuing operations $209.440: income tax applicable to loss on discontinued operations $28,560, and unrealized holding gain on available-for-sale securities (net of tax) $16,800.
Gain on sale of equipment $106,400
Cash dividends declared $168,000
Loss on discontinued operations 84,000
b) Unrealized holding gain on available-for-sale securities and loss on discontinued operations are reported separately from the net income on continuing operations. Therefore, they can be reported in the Comprehensive Income Statement.
Retained earnings January 1, 2020 2,400,000
Administrative expenses 268,800
Cost of goods sold 952,000
Rent revenue 44,800
Selling expenses 336,000
Loss on write-down
F inventory 67 200
Sales Revenue 2,128,000
Shares outstanding during 2020 were 100,000