Question

Duke Company's records show the following account balances at December 31, 2021:

a) Sales revenue$16,800,000
b) Cost of goods sold 9,900,000
c) General and administrative expense 1,090,000
d) Selling expense 590,000
e) Interest expense 790,000
Income tax expense has not yet been determined. The following events also occurred during 2021. All transactions are material in amount.
$390,000 in restructuring costs were incurred in connection with plant closings.
Inventory costing $490,000 was written off as obsolete. Material losses of this type are considered to be unusual.
It was discovered that depreciation expense for 2020 was understated by $59,000 due to a mathematical error.
The company experienced a negative foreign currency translation adjustment of $290,000 and had an unrealized gain on debt securities of $270,000.
Required:Prepare a single, continuous multiple-step statement of comprehensive income for 2021. The company's effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

The comprehensive income for Duke Company in 2021, after considering all revenues, expenses, gains, losses, and taxes, amounts to a total of $2,691,750.

Step-by-step explanation:

Duke Company's Statement of Comprehensive Income for 2021

Sales Revenue: $16,800,000

- Cost of Goods Sold: $9,900,000

= Gross Profit: $6,900,000

- General and Administrative Expense: $1,090,000

- Selling Expense: $590,000

- Restructuring Costs: $390,000

- Obsolete Inventory Write-off: $490,000

= Operating Income: $4,340,000

- Interest Expense: $790,000

+ Prior Year Depreciation Error Correction: $59,000

= Income Before Taxes: $3,609,000

- Income Tax Expense (25%): $902,250

= Net Income: $2,706,750

Other Comprehensive Income (Net of Tax):

- Foreign Currency Translation Adjustment: ($290,000 - 25%): ($217,500)

+ Unrealized Gain on Debt Securities: ($270,000 - 25%): $202,500

= Total Other Comprehensive Income: ($15,000)

Total Comprehensive Income: $2,691,750