Joe Schreiner, controller for Concord Company Inc., recently prepared the compan
ID: 2545303 • Letter: J
Question
Joe Schreiner, controller for Concord Company Inc., recently prepared the company’s income statement and statement of changes in equity for 2017. Schreiner believes that the statements are a fair presentation of the company’s financial progress during the current period, but he also admits that he has not examined any recent professional pronouncements on accounting
A) Assume that Concord Company follows IFRS, and has a tax rate of 30%. Assume that investments are accounted for as FV-OCI investments with gains/losses recycled through net income. Prepare a statement of comprehensive income showing expenses by function. Ignore calculation of EPS. (Round answers to 0 decimal places, e.g. 5,275. Round tax rate to 4 decimal places, e.g. 52.7525%.)
CONCORD COMPANY INC.
Statement of Comprehensive Income
Date:
B)Prepare the retained earnings and accumulated other comprehensive income portion of the statement of changes in equity. Assume an opening balance of $135,000 in accumulated other comprehensive income. (Round answers to 0 decimal places, e.g. 5,275.)
CONCORD COMPANY INC.
Statement of Changes in Equity
Date:
*May be reclassified subsequently to net income or loss.
Income Statement
For the Year Ended December 31, 2017 Sales revenues $ 394,800 Less: Sales returns and allowances 16,600 Net sales revenue 378,200 Cost of goods sold: Inventory, January 1, 2017 $ 48,400 Purchases $ 190,600 Less: Purchase discounts 2,500 188,100 Cost of goods available for sale 236,500 Inventory, December 31, 2017 39,880 Cost of goods sold 196,620 Gross profit 181,580 Selling expenses 40,260 Administrative expenses 32,500 72,760 Income before income tax 108,820 Other revenues and gains Unrealized gain on FV-OCI investments 37,600 Dividends received 41,600 188,020 Income tax 56,406 Net income $ 131,614
Explanation / Answer
$ income before tax 108820 add: dividends received 41600 less: loss on expropriation -11200 add:gain from sale of long term investments 32900 corrected income before tax 172120 (A) income tax @ 30%(A*.3) 51636 (B) net income (A-B) 120484 [C] other comprehensive income (OCI) unrealized gain on FV OCI investments 37600 income tax @ 30% 11280 net OCI 26320 (D) comprehensive income = C+D 146804 B) retained earnings Bal on Jan1 2017 215000 less : correction of prior year error -14534 Bal on Jan1 2017 (restated) 200466 add: net income [c] 120484 Bal on 31 Dec 2017 320950 accumulated oci Bal on Jan1 2017 135000 add: current year OCI (D) 26320 Bal on 31 Dec 2017 161320
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