Question

An inexperienced accountant for Blue Spruce Corp. showed the following in the income statement: income before income taxes $436,000 and unrealized gain on available-for-sale securities (before taxes) $85,500. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 32% tax rate. Prepare a correct statement of comprehensive income.

Answer 1

Answer:

                       Blue Spruce Corp.

      Statement of Comprehensive Income

Income before income taxes                 $436,000  

Less: Income Tax                                   $139,520

($436,000 * 32%)

Net Income                                              $296,480

Other comprehensive income (loss):

Unrealized gain on available-for-sale     $58,140

securities, net of tax ($85500*68%)  

Total Comprehensive Income                $354,620