The trial balance of Kroeger Inc included the following acco

The trial balance of Kroeger Inc. included the following accounts as of December 31, 2018: Debits Credits 200,00 60,00 120,00 140,00 ales revenue Interest revenue Gain on sale of investments Unrealized gains on investments Foreign c translation adjustment 160,00 ost of So 100,00 600,00 500,00 Selling expenses Goodwill impairment loss Interest ex General and administrative ex 30,00 500,00 Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 40%. Question 1: 10 Points Prepare a 2018 multiple-step income statement for Kroeger Inc. with earnings per share disclosure. Question 2: 10 Points Prepare a 2018 separate statement of comprehensive income for Kroeger Inc.

Solution

Q1 Kroeger Inc. Multi-Step Income Statement For the Year Ended December 31, 2018 Sales revenue $      8,200,000 Cost of goods sold          6,100,000 Gross profit          2,100,000 Operating expenses: Selling $      600,000 General and administrative          500,000 Goodwill impairment loss          500,000 Total operating expenses $      1,600,000 Operating income $         500,000 Other income (expense): Gain on sale of investments          120,000 Interest revenue            60,000 Interest expense          (30,000) Total other income, net             150,000 Income before income taxes             650,000 Income tax expense             260,000 Net income             390,000 ÷ Outstanding Shares ÷ 300000 Earnings per share $                 1.3 Q2 Kroeger Inc. Statement of Comprehensive Income For the Year Ended December 31, 2018 Net income $390,000 Other comprehensive income: Unrealized gains on investments, net of tax (140000 x (1-0.40))                  84,000 Foreign currency translation losses, net of tax               (96,000) Total other comprehensive loss                   (12,000) Comprehensive income                   378,000