Question

The following income statement items appeared on the adjusted trial balance of Foxworthy Corporation for the year ended December 31, 2021 ($ in 000s): sales revenue, $22,600; cost of goods sold, $14,650; selling expense, $2,330; general and administrative expense, $1,230; dividend revenue from investments, $230; interest expense, $330. Income taxes have not yet been accrued. The company’s income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in 000s). All transactions are material in amount.

1. Investments were sold during the year at a loss of $300. Foxworthy also had unrealized losses of $200 for the year on investments.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $2,000.
3. During the year, Foxworthy completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP regarding discontinued operations. The division had incurred operating income of $800 in 2016 prior to the sale, and its assets were sold at a
loss of $1,800.
4. Foreign currency translation gains for the year totaled $600.

Required:
Prepare Foxworthy's single, continuous statement of comprehensive income for 2021, including basic earnings per share disclosures. Two million shares of common stock were outstanding throughout the year.

Answer 1

Foxworthy Corporation's comprehensive income statement for 2021 includes various revenues and expenses, both recurring and nonrecurring. After accounting for all items, including taxes, restructuring costs, and losses from discontinued operations, the total comprehensive income is $342,500. The basic earnings per share from continuing operations are $746.25, while including discontinued operations, it is $271.25.

Step-by-step explanation:

Sales Revenue: $22,600,000
Cost of Goods Sold: -$14,650,000
Gross Profit: $7,950,000
Selling Expense: -$2,330,000
General and Administrative Expense: -$1,230,000
Operating Income: $4,390,000
Investment Loss: -$300,000
Dividend Revenue: $230,000
Interest Expense: -$330,000
Restructuring Costs: -$2,000,000
Income from Continuing Operations Before Tax: $1,990,000
Income Tax Expense (25%): -$497,500
Income from Continuing Operations After Tax: $1,492,500
Discontinued Operations (net of tax $250): -$1,550,000
Foreign Currency Translation Gains: $600,000
Net Income: $542,500
Other Comprehensive Income: -$200,000
Total Comprehensive Income: $342,500
Basic Earnings per Share (EPS) from Continuing Operations: $746.25 ($1,492,500 / 2,000,000 shares)
Basic Earnings per Share (EPS) including Discontinued Operations: $271.25 ($542,500 / 2,000,000 shares)

Answer 2

Question attached

Answer and Explanation:

Please find attached