Chapter 4-Income statement Presented below is information (in thousands) related

Question

Chapter 4-Income statement Presented below is information (in thousands) related to Chen Company. Retained earnings, December 31, 2014 Y 650,0o0 Sales revenue Selling and administrative expenses Loss on disposal of component (pre-tax) Cash dividends declared on ordinary shares Cost of goods sold Gain resulting from computation error on depreciation charge in 2013 (pre-tax) Rent revenue Impairment loss Interest expense 1,400,00o 240,000 260,000 33,600 830,000 520,000 120,000 90,000 10,000 Instructions Prepare in good form an income statement for the year 2015. Assume a 30% tax rate and that there were 70,000 ordinary shares outstanding during the year.

Explanation / Answer

INCOME STATEMENT - Chen Company Particulars Amount Working Sales 1,400,000 Cost of goods sold 830,000 Gross profit 570,000 Selling and administrative expenses 240,000 Other income and expense 120,000 Impairment loss 90,000 Income from operations (570,000 +120,000 -240,000 - 90,000) 360,000 Interest expense 10,000 Income before taxes 350,000 Income taxes 105,000 350,000*30% Income from continuing operations 245,000 Discontinued operations, net of applicable income taxes 182000 260000*70% Net income 63,000

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