Question

An income statement consists of the following line items (in millions): Revenue 4,356 Cost of goods...

An income statement consists of the following line items (in millions):
Revenue
4,356
Cost of goods sold
3,487
Operating expenses
428
Interest income
56
Interest expense
132
The firm pays no taxes. Prepare a reformulated income statement that distinguishes items involved in operations from those involved in financing activities.

Homework Answers

Answer #1

Solution:

                                            Reformulated Income Statement

Sl.No.

Particulars

Amount in Millions of Dollars

1

Operating Revenue

$ 4356

2

Less : Cost of goods sold

($ 3487)

3

Less : Operating Expenses

($ 428)

4

Net Income from Operating activities - ( A)

$441

5

Interest Income

$ 56

6

Less : Interest Expense

($ 132)

7

Net Income from Financing activities - (B)

($ 76)

8

Comprehensive Income – (A) + (B)

$ 365

Thus the Income from Operating activities is = $ 441

The income from Financing activities is = ($ 76 )

The Comprehensive income is = $ 365

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