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Single Step Income Staements and Other Financials

The following information was taken from the records of Roland Carlson Inc. for the year 2007. Income tax applicable to income from continuing operations $187,000; income tax applicable to loss on discontinued operations $25,500; income tax applicable to extraordinary gain $32,300; income tax applicable to extraordinary loss $20,400; and unrealized holding gain on available-for-sale securities $15,000.
Extraordinary gain
$ 95,000
Cash dividends declared
$ 150,000
Loss on discontinued operations
75,000
Retained earnings January 1, 2007
600,000
Administrative expenses
240,000
Cost of goods sold
850,000
Rent revenue
40,000
Selling expenses
300,000
Extraordinary loss
60,000
Sales
1,900,000

Shares outstanding during 2007 were 100,000.

Instructions

Prepare a single-step income statement for 2007.
Prepare a retained earnings statement for 2007.
Show how comprehensive income is reported using the second income statement format.

Solution Preview

1. A single step income statement lumps all cash inflows in one section, all expenses and losses in another, and then subtracts expenses from revenue to get net income. In other words, the format is like this:

Revenue and Gains
- Expenses and Losses
= Net Income

For 2007, net income = $351,600
(Details in 1st attached Excel file)

2. Statement of Retained Earnings

Statement of Retained Earnings is:

Beginning Retianed Earnings
Plus: Net Income ...

Solution Summary

1. A single step income statement lumps all cash inflows in one section, all expenses and losses in another, and then subtracts expenses from revenue to get net income. In other words, the format is like this:

Revenue and Gains
- Expenses and Losses
= Net Income

(Details in 1st attached Excel file)

$2.19