Problem 4-1 (Part Level Submission) The following information is related to Mari

Question

Problem 4-1 (Part Level Submission)

The following information is related to Marigold Company for 2017.

Marigold Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Marigold sold the wholesale operations to Rogers Company. During 2017, there were 529,100 shares of common stock outstanding all year.

Prepare a multiple-step income statement. (Round earnings per share to 2 decimal places, e.g. 1.49.)

Retained earnings balance, January 1, 2017 $988,590 Sales Revenue 26,102,600 Cost of goods sold 16,294,600 Interest revenue 79,900 Selling and administrative expenses 4,770,300 Write-off of goodwill 822,300 Income taxes for 2017 1,270,500 Gain on the sale of investments 120,100 Loss due to flood damage 392,700 Loss on the disposition of the wholesale division (net of tax) 448,400 Loss on operations of the wholesale division (net of tax) 86,500 Dividends declared on common stock 239,900 Dividends declared on preferred stock 72,850

Explanation / Answer

Marigold Company INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales Revenue Net sales 26,102,600 Cost of goods sold 16,294,600 Gross profit 9,808,000 Operating Expenses Selling and administrative expenses 4,770,300 Income from operations 5,037,700 Other Revenues and Gains Interest revenue 79,900 Gain on the sale of investments 120,100 200,000 5,237,700 Other Expenses and Losses Write-off of goodwill 822,300 Income before taxes and extraordinary items 4,415,400 Income taxes 1,270,500 Income before extraordinary items 3,144,900 Extraordinary items Loss due to flood damage – extraordinary item 392,700 Loss on the disposition of the wholesale division 86,500 Loss on operations of the wholesale division 86,500 565,700 Net income 2,579,200 Per share of common stock Income before extraordinary items 5.94 3144900/529100 Extraordinary loss net of tax -1.07 565700/529100 Net income 4.87 2579200/529100

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