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    Accounting - Multi-Step Income Statements

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    Presented below is financial information of the Mickey Corporation for 2008
    Beginning Retained Earnings, 1/1/08 $950,000
    Gain on the Sale of Investments (normal recurring) $110,000
    Sales for the Year $30,000,000
    Loss Due to Flood Damage (unusual & infrequent) $125,000*
    Cost of Goods Sold $21,000,000
    Loss on Disposal of Retail Division $450,000
    Interest Revenue $70,000
    Loss on Operations of Retail Division $460,000
    Selling and Administrative Expenses 5,500,000
    Dividends Declared on Common Stock $230,000
    Write-Off of Goodwill $520,000
    Dividends Declared on Preferred Stock $80,000
    Federal Income Tax on Operations for 2008 1,600,000

    *net of tax

    Mickey Corporation decided to discontinue its retail operations and to retain its manufacturing operations. On August 15, Mickey sold the retail operations to Schoen Company. During 2008, there were 250,000 shares of common stock outstanding all year.

    Directions: Prepare a multiple-step income statement for the year 2008 on a separate Excel spreadsheet as directed in the Problem Set 1 directions.

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    Solution Summary

    The expert examines multi-step income statements for federal income tax.