Question

4-8 ultiple-step atement of ome and mprehensive ome -04-1, L04-3 04-5, LO4-6 Duke Company's records show the following account balances at December 31, 2021: Sales revenue $15,000,000 Cost of goods sold 9,000,000 General and administrative expense 1,000,000 Selling expense 500,000 Interest expense 700,000 Income tax expense has not yet been determined. The following events also occurred during 2021. All transac- tions are material in amount. 1. $300,000 in restructuring costs were incurred in connection with plant closings, 2. Inventory costing $400,000 was written off as obsolete. Material losses of this type are considered to be unusual. 3. It was discovered that depreciation expense for 2020 was understated by $50,000 due to a mathematical error. 4. The company experienced a negative foreign currency translation adjustment of $200,000 and had an unreal- ized gain on debt securities of $180,000 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. Use a multiple-step format similar to the one in the Concept Review Exercise at the end of Part A of this chapter (excluding discontinued operations shown there).

Answer 1

Duke company

Statement of comprehensive income

Sales revenue		15,000,000
Cost of goods sold		9,000,000
Gross profit		6,000,000
Operating expenses
Selling expense	500,000
Administrative expenses	1,000,000
Restructuring cost	300,000
Loss from written off inventory	400,000
Total operating expenses		2,200,000
Operating income		3,800,000
Other income (expenses)
Interest expense		700,000
Income before taxes		3,100,000
Income taxes		775,000
Net income		2,325,000
Other comprehensive income (loss),net of tax
Foreign currency translation adjustment,net of tax (200,000*75%)	-150000
Unrealized gains (180,000*75%)	135000
Total other comprehensive income		-15000
Total comprehensive income		2,310,000