Question

At the beginning of 2016, Zipper Company had the shareholders’ equity as shown below:

Common stock $5 par             $35,000

Additional Paid in Capital      $49,000

Retained Earnings                   $63,000

During 2018, the following events and transactions occurred.

1. Zipper had sales revenue of $108,000. It incurred Cost of Goods Sold of $62,000 and Operating Expenses of $12,000.
2. Zipper issued 1,000 shares of its $5 par common stock for $14 per share at the beginning of the year and the same number of shares were outstanding all year.
3. Zipper had an effective cash flow hedge that increased in value (unrealized gain/loss) by $10,000 in the current year.
4. Zipper paid dividends of $6,000.
5. The company’s tax rate was 21%.

Required: a) Prepare an income statement which includes net income and comprehensive income (in other words, the comprehensive income statement), but you can ignore earnings per share. b) Describe the alternative formats you could have used for this statement.

Answer 1

Solution :-

(a).

(b).