Textbook Problem

Comprehensive: Income Statement and Retained Earnings Milwaukee Manufacturing Company presents the following partial list of account balances, after adjustments, as of December 31, 2019:

The following information is also available but is not reflected in the preceding accounts:

1. a. The company sold Division E (a major component of the company) on August 2, 2019. During 2019, Division E had incurred a pretax loss from operations of $16,000. However, because the acquiring company could vertically integrate Division E into its facilities, Milwaukee Manufacturing was able to recognize a $42,000 pretax gain on the sale.
2. b. On January 2, 2019, without warning, a foreign country expropriated a factory of Milwaukee Manufacturing which had been operating in that country. As a result of that expropriation, the company has incurred a pretax loss of $30,000.
3. c. The common stock was outstanding for the entire year. A cash dividend of $1.20 per share was declared and paid in 2019.
4. d. The 2019 income tax expense totals $31,050 and consists of the following:

Required:

1. 1. As supporting documents for Requirement 2, prepare separate supporting schedules for selling expenses and for general and administrative expenses (include depreciation expense where applicable in these schedules).
2. 2. Prepare а 2019 multiple-step income statement for Milwaukee Manufacturing.
3. 3. Prepare a 2019 retained earnings statement.
4. 4. Next Level What was Milwaukee Manufacturing’s return on common equity for 2019 if its average shareholders’ equity during 2019 was $500,000? What is your evaluation of this return on common equity if its “target” for 2019 was 15%?
5. 5. Next Level Discuss how Milwaukee Manufacturing’s income statement in Requirement 2 might be different if it used IFRS.