Question

In the current year, Randa Merchandising, Inc., sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. Item Debit Credit 1. Net sales $ 2,980,000 2. Gain on state’s condemnation of company property 266,000 3. Cost of goods sold $ 1,520,828 4. Income tax expense 207,000 5. Depreciation expense 250,000 6. Gain on sale of wholesale business segment, net of tax 755,000 7. Loss from operating wholesale business segment, net of tax 475,000 8. Loss of assets from meteor strike 656,000 Prepare the December 31 year-end income statement. (Loss amounts should be indicated with a minus sign.)

Answer 1

Rhanda Merchandising Inc.

Income Statement

Total revenue $2,980,000

-Cost of goods sols ($1,520,828)

Gross profit $1,459,172

-Depreciation expense ($250,000)

Operating profit $1,209,172

Gain on state’s $266,000

condemnation of

company property

-Loss of assets from ($656,000)

meteor strike

Income from $819,172

continuing operations

before taxes

-Income taxes ($207,000)

Income from $612,172

continuing operations

after taxes

Gain from discontinued $755,000

operations

-Loss from discontinued ($475,000)

operations

net income $892,172