all information is provided

TESTING YOUR KNOWLEDGE Page 1 ACCOUNTING 2101/6101 CHAPTER 4 The Goodman Corporation began operations on January 1, 20x1. You have recently been selected as the new accountant for the company and have been presented with the following information. GOODMAN CORPORATION Income Statement For the Year Ended December 31, 20x8 Sales Cost of Goods Sold Gross Profit Selling and Administrative Expenses Income from operations Other Gains and Losses $ 10,144,188 4,625,094 5,519,094 2,160,000 3,359,094 Gain on sale of investments $2,850,000 Loss from disposal of subsidiary Income from continuing operations before Income Taxes Income Tax (30%) Net Income 1,780,0001,070,000 4,429,094 1,328,728 S 3.100.366 GOODMAN CORPORATION Statement of Retained Earnings For the Year Ended December 31, 20x8 Retained Earnings, 1/1/x8 Add: Net Income Sub-total Less: Dividends Retained Earnings, 12/31/x8 5,600,000 3,100,366 8,700,366 1,000,000 $ 7,700,366 In addition, this information was provided: Common shares outstanding during the entire year (20x8) totaled 500,000. purchased or sold during 20x8. 1) No shares were 2) A warehouse was acquired on January 1, 20x1 for $850,000; straight-line depreciation was used, with an estimated salvage value of 15% and an estimated life of 10 years. The warehouse was sold for $480,000 on November 1, 20x6. A review of this transaction indicated that depreciation was never recorded for the ten months of 20x6 (from January 1 through November 1) and, consequently, the gain reported in 20x6 was incorrectly stated