Question

The following information is related to Kingbird Company for 2017.

Answer 1

Answer:

Net income is $2,474,000

Retained earning for the year 2017 is $2,142,000

Retained earnings balance at December 31, 2017 is $3,123,000

Explanation:

A multi-step income statement is an income statement that shows gross profit and the detailed of each category of expenses and incomes to arrive at the net income of a company for a particular period.

This can be prepared as follows:

Kingbird Company

Mutiple step income statement

for the year ended December 31, 2017

Details                                                                  $        

Sales Revenue                                           26,100,000

Cost of goods sold                                    (16,100,000)

Gross profit                                                10,000,000

Operating expenses:

Selling and administrative expenses        (4,710,000)

Operating income                                       5,290,000  

Other income (loss):

Gain on the sale of investments                     111,000

Write-off of goodwill                                      (821,000)

Loss due to flood damage                            (391,000)

Interest income:

Interest revenue                                               71,000  

Income before tax                                       4,260,000

Income taxes for 2017                                (1,254,000)

Income after tax                                          3,006,000

Extraordinary items:

Loss on wholesale div. disp. (net of tax)      (441,000)

Loss on wholesale div. op. (net of tax)          (91,000)

Net income                                                   2,474,000

Preferred stock dividend                                (81,000)

Common stock dividend                               (251,000)

Retained earning for the year 2017             2,142,000

Retained earnings balance, Jan. 1, 2017        981,000

Retained earnings bal., Dec. 31, 2017       3,123,000