Question

Sandhill Corporation's capital structure consists of 50,000 shares of common stock. At December 31, 2020 an analysis of the accounts and discussions with company officials revealed the following information:

Sales revenue $1,238,000
Discontinued operations loss (net of tax) 63,000
Selling expenses 126,600
Cash 59,400
Accounts receivable 90,800
Common stock 200,000
Cost of goods sold 702,300
Accumulated depreciation-machinery 180,800
Dividend revenue 8,300
Unearned service revenue 4,700
Interest payable 1,600
Land 370,000
Patents 112,000
Retained earnings, January 1, 2020 253,870
Interest expense 18,900
Administrative expenses 165,400
Dividends declared 26,400
Allowance for doubtful accounts 5,400
Notes payable (maturity 7/1/23) 205,000
Machinery 452,000
Materials 38,200
Accounts payable 57,400

The amount of income taxes applicable to income was $69,930, excluding the tax effect of the discontinued operations loss which amounted to $27,000.

Prepare a multiple-step income statement.

Answer 1

Answer:

See the explanation below.

Explanation:

                           Sandhill Corporation

Multiple-Step Income Statement for December 31, 2020

Details                                                   $                        $          

Sales revenue                                                          1,238,000

Cost of goods sold                                                  (702,300)  

Gross profit                                                               535,700  

Administrative expenses                                         (165,400)

Selling expenses                                                      (126,600)

Allowance for doubtful accounts                              (5,400)  

Trading profit                                                             238,300

Other income:

Dividend revenue                            8,300  

Unearned service revenue            4,700                  13,500  

Income before interest                                               251,800

Interest expense                                                         (18,900)  

Income from ordinary activities                                 232,900

Income taxes                                                               (69,930)  

Ordinary activities income after tax                           162,970

Exceptional item:

Discontinued operations loss (net of tax)                (63,000)  

Earnings for the year                                                   99,970

Dividends declared                                                   (26,400)  

Retained earnings for the year                                 73,570