Question

Duke Company’s records show the following account balances at December 31, 2018:

Sales	$	17,200,000
Cost of goods sold		10,100,000
General and administrative expenses		1,110,000
Selling expenses		610,000
Interest expense		810,000

Income tax expense has not yet been determined. The following events also occurred during 2018. All transactions are material in amount.

1. $410,000 in restructuring costs were incurred in connection with plant closings.
2. Inventory costing $510,000 was written off as obsolete. Material losses of this type are considered to be unusual.
3. It was discovered that depreciation expense for 2017 was understated by $61,000 due to a mathematical error.
4. The company experienced a negative foreign currency translation adjustment of $310,000 and had unrealized gains on investments of $290,000.

Required:
Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company’s effective tax rate on all items affecting comprehensive income is 40%. 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

Income Statement

Particulars Amount

Sales 17200000

Cost of Sales -10100000

Gross Profit 6100000

Operating Expense

Depreciation -61000

Selling Expense -610000

Administrative Expense - 1110000

Material loss of inventory - 510000

Total Operating Expense 2291000

Operating Income 3809000

Non Operating And Other   

Interest Expense -810000

Restructuring Cost -410000

Foreign Currency Translation Adjustment -310000

Gain on investment 174000

Total Non-Operating -1356000

Total Income 2453000

Taxation @ 40% -981200

NET INCOME 1471800