Question

The following information is related to Nash Company for 2020.

Answer 1

Answer:

Nash Company

Multi-step Income Statement

For the year ended December 31, 2020:

Sales Revenue                                     $23,000,000

Cost of goods sold                                  14,720,000

Gross income                                         $8,280,000

Operating Expenses:

Selling and administrative expenses     4,324,000

Loss due to flood damage                        358,800

Write-off of goodwill                                  754,400

Total operating expenses                   $5,437,200

Operating income                               $2,842,800

Interest revenue                                         64,400

Gain on the sale of investments               101,200

Income before taxes                          $3,008,400

Income taxes for 2020                           1,144,480

Income after taxes                              $1,863,920

Loss on the disposition of

 the wholesale division (net of tax)       404,800

Loss on operations of the

 wholesale division (net of tax)               82,800

Net Comprehensive Income             $1,376,320

Dividends declared: preferred stock      73,600

Earnings available to equity holders  1,302,720

Retained earnings  1/1/2020                 901,600

Dividends declared: common stock    230,000

Retained earnings, 12/31/2020       $1,974,320

Explanation:

Nash's multi-step income statement has separate sections for operating income and other incomes before net comprehensive income.  This last income is the point at which dividends are paid out to preferred stockholders before the retained earnings beginning balance are added, and then dividends are paid to the common stock.