Question

Part 2, Comprehensive Problem

Lacey Inc. manufactures dog toys. The following information was taken from the records of Lacey Inc. for the year ended 2018. All income statement amounts are before tax. The tax rate on all items is 30%.

Unusual gain $133,000                                                           Cash dividends declared $ 210,000

Loss on discontinued operations 105,000                              Retained earnings Jan. 1, 2018  $840,000

Administrative expenses 336,000                                           Cost of goods sold  $1,190,000

Rent revenue 56,000                                                               Selling expenses  $420,000

Unusual loss 84,000                                                               Sales  $2,700,000

Unrealized holding gain on available-sale-securities $21,000

Sales discounts 40,000

Common shares of stock outstanding during 2018 were 100,000. In 2018, Lacey changed from using LIFO to Weighted-Average for inventory. The cumulative effect of this change on prior years’ income, prior to tax, was ($60,000). That is, net income would have been lower under Weighted-Average than LIFO. The applicable tax rate for prior years is 30%.

Required:

1. Prepare a multi-step income statement for 2018.
2. Prepare a retained earnings statement
3. Calculate comprehensive income

Based on your responses to (a) (b) and (c), enter the items requested below in the Assessment posted online.

8. Net Sales
9. Gross profit
10. Income from operations
11. Income before income tax
12. Income from continuing operations
13. Net income
14. Retained earnings, 12/31/2018
15. Comprehensive income for 2018

Answer 1