Question

The following information was taken from the records of Marigold Inc. for the year 2020: Income tax applicable to income from continuing operations $160,820; income tax applicable to loss on discontinued operations $21,930, and unrealized holding gain on available-for-sale securities (net of tax) $12,900.

Gain on sale Of equipment $81,700
Loss on discontinued operations 64,500
Administrative expenses 206,400
Rent revenue 34,400
Loss on write-down of inventory 51,600

Cash dividends declared $129,000
Retained earnings January 1, 2020 840,000
Cost of goods sold 731,000
Selling expenses 258,000
Sales Revenue 1634,000

Shares outstanding during 2020 were 100,000.

Required:
Prepare a single-step income statement (with respect to items in Income from operations)

Answer 1

Answer:

Net income is $312,610.

Explanation:

This can then be prepared as follows:

Marigold Inc.

Single-Step Income Statement

For the Year 2020

Particulars                                                               $                        $        

Revenue

Sales Revenue                                               1,634,000

Rent revenue                                                      34,400

Gain on sale Of equipment                                81,700  

Total revenue                                                                          1,750,100

Expenses

Cost of goods sold                                         (731,000)

Selling expenses                                           (258,000)

Administrative expenses                              (206,400)

Loss on write-down of inventory                    (51,600)  

Total expenses                                                                     (1,247,000)  

Operating income before tax                                                 503,100

Tax on income from continuing

operations                                                                             (160,820)  

Income from operation after tax                                           342,280

Other income (loss ) (net of tax)

Unrealized holding gain on

available-for-sale securities (net of tax)                                  12,900  

Income from continuing operations

after tax                                                                                   355,180  

Discontinued operations

Loss on discontinued operations

before tax                                                        (64,500)

Tax on loss on discontinued operations         21,930  

Loss on discontinued operations after tax                           (42,570)  

Net income                                                                              312,610  

Earning per share

(Net income / Number of Shares outstanding)                           3.13