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13 April, 20:15

Presented below is information related to Oriole Corp. for the year 2020.

Net sales $1,534,000 Write-off of inventory due to obsolescence $94,400

Cost of goods sold 920,400 Depreciation expense omitted by accident in 2019 64,900

Selling expenses 76,700 Casualty loss 59,000

Administrative expenses 56,640 Cash dividends declared 53,100

Dividend revenue 23,600 Retained earnings at December 31, 2019 1,156,400

Interest revenue 8,260 Effective tax rate of 20% on all items

Prepare a multiple-step income statement for 2020. Assume that 62,370 shares of common stock are outstanding.

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  1. 13 April, 21:43
    0
    Oriole Corp.

    Income Statement

    For the Year Ended December 31, 2020

    Total sales $1,534,000

    Cost of goods sold ($920,400)

    Loss from inventory write off ($94,400)

    Gross margin $519,200

    Operating expenses:

    Administrative expenses $56,640

    Selling expenses $76,700

    Total operating expenses ($133,340)

    Income from operations $385,860

    Other revenues and gains

    Dividend revenue $23,600

    Interest revenue $8,260

    Total other revenues and gains $31,860

    Other expenses and losses

    Depreciation expense 2019 $64,900

    Casualty loss $59,000

    Total other expenses and losses ($123,900)

    Net income before taxes $293,820

    Income taxes 20% * ($58,764)

    Net income $235,056

    *Generally dividend revenue is not taxed or only 30% of it sis taxed. Since we were told to apply 20% income tax to all items, I didn't calculate it separately. But if you calculate it separately, then income taxes would be $1,156 lower (total $57,608) and net profit would be higher (total $236,212).
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