Question

Presented below is information related to Sheridan Company at December 31, 2017, the end of its first year of operations.

Sales revenue $287,320
Cost of goods sold 126,540
Selling and administrative expenses 53,200
Gain on sale of plant assets 31,270
Unrealized gain on available-for-sale investments 10,590
Interest expense 5,720
Loss on discontinued operations 10,870
Dividends declared and paid 4,570

Compute the following:

(a) Income from operations $
Presented below is information related to Sheridan

(b) Net income $
Presented below is information related to Sheridan

(c) Comprehensive income $
Presented below is information related to Sheridan

(d) Retained earnings balance at December 31, 2017 $
Presented below is information related to Sheridan

Answer 1

Answer:

(a) Income from operations $ 107,580

(b) Net income $ 86,534

(c) Comprehensive income $ 82,548

(d) Retained earnings balance at December 31, 2017 $81,964

Explanation:

                                  Sheridan Company

            Income statement for the year December 31, 2017

                                                                     $

Sales                                                         287,320

Cost of goods sold                                 (126,540)

Gross Profit                                             160,780        

Administrative and selling expenses    (53,200)

(a) Operating Income                            107,580        

Gain one Sale of Plant Asset                 31,270

Interest expense                                     (5,720)      

Income before Tax                                 133,130

Tax rate 35%                                           (46,596)

(b) Net Income                                       86,534

Other Comprehensive Income:

Unrealized gain on available-for-sale    6,884

Net of tax ( 10590 x ( 1 - 0.35))                

Loss on discontinued operations          (10,870)

(c) Total Comprehensive Income         82,548

(d) Retained Earning at the end December 31, 2017 = $86,534 - $4,570 = $81,964.

* Opening balance of retained earning has not been provided.