Exercise 4-2 Presented below is information related to Pronghorn Company at Dece
ID: 340508 • Letter: E
Question
Exercise 4-2 Presented below is information related to Pronghorn Company at December 31, 2017, the end of its first year of operations Sales revenue Cost of goods sold Selling and administrative expenses Gain on sale of plant assets Unrealized gain on available-for-sale investments Interest expense Loss on discontinued operations Dividends declared and paid $291,980 128,220 51,800 27,190 10,240 5,700 12,550 4,600 Compute the following: (a) Income from operations (b) Net income (c) Comprehensive income (d) Retained earnings balance at December 31, 2017Explanation / Answer
(a) Income from Operation = Sales Revenue - COGS - Seling & admin exp
= $291,980 - $128,220 - $51,800 = $111,960
(b) Net Income
= Sales Revenue - COGS - Seling & admin exp + Gain on sales of assets - Int exp - Loss on Discontinued Ope.
= $291,980 - $128,220 - $51,800 + $27,190 - $5,700 - $12,550 = $120,900
(c) Comprehensive Income = Net Income + Unrealized gain on available for sale investments
= $120,900 + $10,240 = $131,140
(d) Retained earning balance at December 31 ,2017 = Net Income - Dividends declare & paid
= $120,900 - $4,600 = $116,300
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