Question

Duke Company’s records show the following account balances at December 31, 2018: Sales $ 17,000,000 Cost of goods sold 10,000,000 General and administrative expenses 1,100,000 Selling expenses 600,000 Interest expense 800,000 Income tax expense has not yet been determined. The following events also occurred during 2018. All transactions are material in amount. $400,000 in restructuring costs were incurred in connection with plant closings. Inventory costing $500,000 was written off as obsolete. Material losses of this type are considered to be unusual. It was discovered that depreciation expense for 2017 was understated by $60,000 due to a mathematical error. The company experienced a negative foreign currency translation adjustment of $300,000 and had unrealized gains on investments of $280,000. Required: Prepare a single, continuous multiple-step statement of comprehensive income for 2018. The company’s effective tax rate on all items affecting comprehensive income is 40%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.) rev: 09_28_2018_QC_CS-140907 Next

Answer 1

Particulars	Amount in $	Amount in $
Sales		1,70,00,000
Less: Cost of Good Sold		-1,00,00,000
Gross Profit		70,00,000
Less: Operating Expenses:
General and Administrative expenses	11,00,000
Selling Expenses	6,00,000
Interest expense	8,00,000	25,00,000
Operating Income		45,00,000
Less: Adjustment for Non-operating items:
Restructuring Cost for plant	4,00,000
Inventory obsolete	5,00,000
Understated Depreciation cost	60,000
Foreign currency translation adjustment loss	3,00,000	12,60,000
Add: Unrealized gains on investments		2,80,000
Net Income before tax		35,20,000
Less: Tax rate @ 40%		14,08,000
Net Income after tax		21,12,000