The following information for the year ending December 31, 2016 has been provided for the Stone Company.
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Cost of Goods Sold
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$300,000
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Net Sales
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773,000
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Income tax expense-to be determine using the 40% tax rate
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???
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Advertising expense
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13,000
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Bad debt expense
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5,000
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Gain on sale of short-term (trading) investment
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3,000
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Depreciation expense using the old estimated useful life
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45,000
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Interest revenue
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10,000
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Other general and administrative expenses
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50,000
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Officers and Office salaries
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210,000
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Interest expense
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6,000
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Dividends
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15,000
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Retained Earnings as of January 1, 2016
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75,000
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In addition, the following information has been assembled:
1. During 2016, Stone decided to undertake a major restructuring of one of its divisions. As a result, it has been decided that assets with a book value of $100,000 are actually worthless. In addition, Stone estimates that it will cost a total of $140,000 in the next few years to relocate a number of employees in connection with this restructuring. Stone decided to record all the estimated restructuring liabilities as expenses in year 2016.
2.On January 1, 2016, Stone purchased investment securities for $350,000. Stone intends to hold these securities (classified as available-for-sale) for the foreseeable future. As of December 31, 2016, the securities have a market value of $250,000.
3.Stone has a foreign subsidiary located in China. During 2016, the Chinese currency (the yuan) declined in value. The effect of this decline was to reduce the U.S. dollar value of the equity of this foreign subsidiary by $60,000.
4.Stone changed the estimated useful life of its PP&E in 2016. The effect in 2016 was to decrease reported depreciation expense from $45,000 to $35,000.
5. On November 1, 2016, Stone formally decided to discontinue one of its business segments. None of the other information given in this exercise relates to this discontinued segment.
On December 31, 2016, the end of the company's fiscal year, the division had not yet been sold. On that date, the assets of the division had a book value of 70,000 and a fair value, minus the anticipated cost to sell, of 45,000. Operating income for the segment for the entire year of 2016 was $10,000.
6.The income tax rate for ALL items is 40%. The company has 50,000 shares outstanding-do not forget to calculate EPS.
I.Question's REQUIREment: Prepare two financial statements:
Multi-step Income Statement
and
Statement of Comprehensive Income for the year ended 2016.
II.My requirements:My requirements:
1.please follow this order: (net sales→COG→Gross profit→Operating expenses→otehr income (expenses)→Income from continuing oeprating→Discontinuing operating →Net income(Loss)→Comprehensive income(Loss))
2.In discontinued operating, there is a (income from operation of 10,000 including impairment loss of (25,000).) I don't know where to get it and how to calculate.Please explain this.