Preparing an Income Statement and a Statement of Comprehensive Income

The following pretax amounts are taken from the adjusted trial balance of Avoca Auto Corp. at December 31, 2020, its annual year-end.

Sales revenue	$390,000
Cost of goods sold	165,000
Operating expenses	120,000
Gain on debt retirement	30,000
Interest expense	12,000
Loss from discontinued operations	75,000
Retained earnings balance, December 31, 2019	45,000
Dividends declared and paid	37,500
Unrealized holding gain on debt investment securities, net of tax	6,000
Common stock, weighted average shares outstanding	15,000 shares

Required

a. Prepare a single-step income statement. Assume an average 25% tax rate on all items. Include earnings per share disclosures. b. Prepare a comprehensive income statement by showing a separate but consecutive statement of comprehensive income. Ignore earnings per share disclosures. c. Compute the ending retained earnings balance at December 31, 2020.

• Enter revenues and gains and expenses and losses in the order of the largest dollar amount to the smallest dollar amount.
• Do not use negative signs with any of your answers.
• Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny.

• Single-step Income Statement
• Statement of Comprehensive Income
• Retained Earnings Balance

c. Compute the ending retained earnings balance at December 31, 2020.