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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Complex Income Statement The following items were derived from Woodbine Circle Corporation’s adjusted trial balance on December 31, 2019:

Chapter 5, Problem 7P, Complex Income Statement The following items were derived from Woodbine Circle Corporations adjusted , example  1

Other financial data for the year ended December 31, 2019:

Chapter 5, Problem 7P, Complex Income Statement The following items were derived from Woodbine Circle Corporations adjusted , example  2

Required:

Using the multiple-step format, prepare a formal income statement for Woodbine for the year ended December 31, 2019, together with the appropriate supporting schedules. All income taxes should be appropriately shown.

To determine

Prepare an income statement with appropriate supporting schedules of Company W for the year ended December 31, 2019; use the multiple-step format.

Explanation

Multi-step income statement: The income statement represented in multi-steps with several subtotals, to report the income from principal operations, and separate the other expenses and revenues which affect net income, is referred to as multi-step income statement.

Prepare an income statement with appropriate supporting schedules of Company W for the year ended December 31, 2019; use the multiple-step format:

Company W
Income Statement
For the Year Ended December 31, 2019
ParticularsAmounts ($)

Amounts

($)

Sales  10,100,000
Less: Cost of sales  (6,200,000)
Gross profit   3,900,000
Less: Administrative expenses  (2,000,000)
    Operating income  1,900,000
Other expense: 
Add: Gain on sale of land   300,000
Less: Interest expense  (210,000)
    Income from continuing operations before income taxes  1,990,000
Less: Income taxes (Schedule 1) (796,000)
    Income from continuing operations  1,194,000
Discontinued operations (Schedule 2) 
Operating income from discontinued AL Division 396,000
Loss on sale of AL Division (2) (150,000)246,000
Net income  (a) 1,440,000
Number of common shares (b) 1,000,000
Earnings per Common Share (a÷b)  $1

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