Presented below are selected ledger accounts of Sunland Corporation as of Decemb

Question

Presented below are selected ledger accounts of Sunland Corporation as of December 31, 2017.

Cash $67,100

Administrative expenses 106,500

Selling expenses 84,980

Net sales 543,300

Cost of goods sold 261,800

Cash dividends declared (2017) 20,730

Cash dividends paid (2017) 17,400

Discontinued operations (loss before income taxes) 44,200

Depreciation expense, not recorded in 2016 35,500

Retained earnings, December 31, 2016 96,240

Effective tax rate 30%

a) Compute net income for 2017.
b) Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 18,040 shares of common stock were outstanding during 2017.

Explanation / Answer

SOLUTION

(A) Calculation of net income for 2017-

(B) Partial Income statement

*Income from continuing operations before income tax

Sales-Cost of goods sold - Administrative expense - Selling expense

= 543,300 - 261,800 - 106,500 - 84,980 = 90,020

Particulars Amount ($) Net sales 543,300 Less: Cost of goods sold (261,800) Gross profit 281,500 Less: Expenses Administrative expenses (106,500) Selling expenses (84,980) Discontinued operations-loss (44,200) Income before income tax 45,820 Income tax @30% 13,746 Net income 32,074

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