Comprehensive: Income Statement and Supporting Schedules

The following is a partial list of the account balances, after adjustments, of the Silvoso Company on December 31, 2016:

Depreciation Expense: Buildings and Office Equipment	$ 14,500
Sales Commissions and Salaries	18,200
Inventory, January 1, 2016	37,800
Sales Supplies Used	5,600
Retained Earnings, January 1, 2016	83,700
Purchases Returns and Allowances	6,200
Bad Debts Expense	2,700
Transportation-in	13,500
Sales Discounts Taken	4,900
Purchases	173,000
Delivery Expense	7,700
Office Supplies Expense	1,400
Common Stock, $10 par	80,000
Loss on Sale of Office Equipment (pretax)	5,000
Insurance and Property Tax Expense	8,500
Sales	328,600
Rent Revenue	6,900
Office and Administrative Salaries Expense	32,000
Promotion and Advertising Expense	17,000
Purchases Discounts Taken	4,100
Depreciation Expense: Sales Equipment	9,600
Interest Expense	3,700

The following information is also available:

The company declared and paid a $0.60 per share cash dividend on its common stock. The stock was outstanding the entire year.

A physical count determined that the December 31, 2016 ending inventory is 34,100.

A tornado destroyed a warehouse, resulting in a pretax loss of $12,000. The last tornado in this area had occurred 10 years earlier.

On May 1, 2016, the company sold an unprofitable division (R). From January through April, Division R (a component of the company) had incurred a pretax operating loss of $8,700. Division R was sold at a pretax gain of $10,000.

The company is subject to a 30% income tax rate. Its income tax expense for 2016 totals $4,230. The breakdown is as follows:

Income Tax Expense (Credit) Related to	Amount
Continuing income	$ 7,440
Operating loss of Division R	(2,610)
Gain on sale of Division R	3,000
Loss from tornado	(3,600)
	$ 4,230

The company had average Shareholders' Equity of $150,000 during 2016.

Required:

1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense. Enter all amounts as positive numbers.

SILVOSO COMPANY
For Year Ended December 31, 2016
Schedule 1: Cost of Goods Sold
			$
		$
		$
	$
			$
			$
Schedule 2: Selling Expenses
			$
Total selling expenses			$
Schedule 3: General and Administrative Expenses
			$
Total general and administrative expenses			$
Schedule 4: Depreciation Expense
			$
Total depreciation expense			$

2. Prepare a multiple-step income statement for the year ended December 31, 2016 for the Silvoso Company. Round earnings per share computations to two decimal places.

SILVOSO COMPANY
Income Statement (Multi-Step)
For Year Ended December 31, 2016
		$
		$
		$
		$
Operating expenses
	$
Total operating expenses
		$
Other items
	$
		$
		$
Results from discontinued operations
	$
		$
Components of Income		EPS
		$

3. Prepare a statement of Retained Earnings for the year ended December 31, 2016.

SILVOSO COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2016
	$
	$
	$

4. What was Silvoso's return on common equity for 2016? Round to two decimal places.

Return on Shareholders' Equity = %