Presented below is information related to Oxford Corporation for 2010. Sales $22
ID: 2434652 • Letter: P
Question
Presented below is information related to Oxford Corporation for 2010.Sales $22,000,000
Interest revenue 90,000
Gain on the sale of land 70,000
Cost of goods sold 13,000,000
Selling expenses 1,300,000
Administrative expenses 1,400,000
Interest Expense 40,000
Loss due to flood damage - extraordinary item 110,000
Loss on disposition of automotive division 240,000
Loss on operation of automotive division 90,000
Dividends declared on common stock 60,000
Retained earnings balance, January 1, 2010 650,000
Income tax rate 40%
Shares of common stock outsanding during 2010 400,000
Oxford Company decided to discontinue its entire automotive operations and to retain its trucking operations. On September 30, Oxford sold the automotive operations.
Instructions
Prepare a multiple-step income statement and a retained earnings statement.
Explanation / Answer
Income Statement Sales $22,000,000 Cost of goods sold 13,000,000 Gross Profit 9,000,000 Interest revenue 90,000 Gain on the sale of land 70,000 Total Income 9,160,000 Selling expenses 1,300,000 Administrative expenses 1,400,000 Interest Expense 40,000 2,740,000 Income from operations 6,420,000 Less: Income Tax 2,568,000 Income after Income tax 3,852,000 Extra ordinary items Loss due to flood damage – net of $44,000 tax saving ($66,000) Loss from Discontinued operations Loss on disposition of automotive division Net of $96,000 tax saving ($144,000) Loss on operation of discontinued operations Net of $36,000 tax saving ($54,000) Net Income of the year $3,588,000 ======== Retained earnings balance, January 1, 2010 650,000 Add Net income for the year 3,588,000 4,238,000 Dividends declared on common stock 60,000 Balance as on December 31, 2010 4,178,000 =======