Answer:
<u>a single, continuous multi-step statement of comprehensive income for 2016</u>
Sales $15,000,000
Cost of Goods Sold ($ 9,400,000)
Gross Profit $5,600,000
Less Expenses
General and Administrative expenses. ($1,030,000)
Selling Expenses ($500,000)
Interest expense ($700,000)
Net Income before tax $3,370,000
Income tax expense at 40% ($ 1,348,000)
Net Income after tax $ 2,022,000
Explanation:
First make the <em>adjustments</em> that affect the Income Statement as follows :
Item 2. Obsolete Inventory
Cost of Goods Sold = $9,000,000 + $400,000 = $ 9,400,000
Reason : Correction of Costs of Sales that has been understated.
Item 3. Depreciation
General and Administrative expenses = $1,000,000 + $50,000 = $1,050,000
Reason : Correction of Depreciation Expenses that was understated.
Item 4. Gains and Loses
General and Administrative expenses = $1,050,000
foreign currency translation loss = ($200,000)
unrealized gains on investments = $180,000
General and Administrative expenses = $1,030,000
<em>Note : Item 1 is a Capital Expenditure.</em>
