15 HW eBook I Show Me How Income Statement and Retained Earnings The Huff Company presents the following partial list of account balances taken from its December 31, 2019 adjusted trial balance: Sales (net) $123,000 Operating expenses $27,200 Interest expense 4,100 Common stock, $5 par 16,500 Cost of goods sold 62,000 Retained earnings, 1/1/2019 41,800 The following information is also available for 2019 and is not reflected in the preceding accounts: 1. The common stock has been outstanding all year. A cash dividend of $1.1 per share was declared and paid. 2. Land was sold at a pretax gain of $5,500. 3. Division X (a major component of the company was sold at a pretax gain of $4,650. It had incurred a $9,400 pretax operating loss during 20 4. A tornado, which is an unusual event in the area, caused a $5,380 pretax loss. 5. The income tax rate on all items of income is 30%. 6. The average shareholders' equity is $88,000. Required: 1. Prepare a 2019 multiple-step income statement for Huff. Round earnings per share computations to two decimal places. HUFF COMPANY Income Statement (Multi Step) For Year Ended December 31, 2019 Sales (net) 123,000 Cost of goods sold -62,000 Gross profit 61,000 -27,200 Operating expenses Check My Work 1 more Check My Work uses remaining Deianment Seere 7020 All work saved. CH 5 HW eBook ( Show Me How Operating expenses -27,200 Operating income 33,800 Other items Gain on sale of land 5,500 Loss caused by tornado 5,380 Interest expense -4,100 3,980 V Pretax income from continuing operations 37,780 X Income tax expense -11,334 X Income from continuing operations 26,446 X Results from discontinued operations Loss from operations of discontinued division X (net of income tax credit) -6,580 Gain on disposal of division X (net of income taxes) Net income Earnings per Common Share Components of Income Income from continuing operations 1.61 x Results from discontinued operations Net income Feedhack CH 5 HW eBook Show Me How $2.80 Income from continuing operations Results from discontinued operations Extraordinary loss from explosion (0.56) Net income (0.35) $1.89 2. Prepare a 2019 retained earnings statement. HUFF COMPANY Statement of Retained Earnings For Year Ended December 31, 2019 Retained earnings, 1/1/2019 41,800 Add: Net income for 2019 Less: Cash dividends Retained earnings, 12/31/2019 $ Feedback Check My Work Although not a required financial statement, whenever a corporation issues an income statement and a balance sheet, it may include a sched retained earnings balance. Some smaller companies report this schedule as a separate financial statement, called the statement of retained statement of shareholders' equity. Check My Work 1 more Check My Work uses remaining CH 5 HW eBook Show Me How $68,150 Retained earnings, January 1, 2019 Add: Prior period adjustment, correction of understatement of 2012 ending inventory (net of $1,500 income taxes) Adjusted retained earnings, January 1, 2019 3,500 $71,650 Add: Net income 9,450 Less: Cash dividends declared, $0.50 per share (2,500) Retained earnings, December 31, 2019 $78,600 3. Compute the 2019 return on common equity. Round to one decimal place. % Feedback Check My Work Incorrect Feedback Check My Work Partially correct Check My Work 1 more Check My Work uses remaining