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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Income Statement, Lower Portion At the beginning of 2019, Cameron Company’s retained earnings was $212,000. For 2019, Cameron has calculated its pretax income from continuing operations to be $120,000. During 2019, the following events also occurred:
- 1. During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $39,000 and that a pretax loss of $40,500 was incurred on the sale of Division M.
- 2. Cameron had 21,000 shares of common stock outstanding during all of 2019. It declared and paid a $1 per share cash dividend on this stock.
Required:
Assuming that all the pretax items are subject to a 30% income tax rate:
- 1. Complete the lower portion of Cameron’s 2019 income statement, beginning with “Pretax Income from Continuing Operations.”
- 2. Prepare an accompanying retained earnings statement.
1.
Prepare the lower portion of the income statement for Company C for the year ended December 31, 2019.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Prepare the lower portion of the income statement for Company C for the year ended December 31, 2019.
| Company C | ||
| Income statement (Partial) | ||
| For the year ended December 31, 2019 | ||
| Particulars | Amount ($) | Amount ($) |
| Pretax income from continuing operations | $120,000 | |
| Income tax expense | ($36,000) | |
| Income from continuing operations | $84,000 | |
| Results from discontinued operations: | ||
| Income from operations of discontinued Division M | $27,300 | |
| Loss on sa... | ||
2.
Prepare the retained earnings statement for the year ended December 31, 2019.
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