Question
PROBLEM 3 Income Statement (20 points) Selected information about income statement accounts for the Chatham Company is presented below (the company's fiscal year ends on
PROBLEM 3 Income Statement (20 points)
Selected information about income statement accounts for the Chatham Company is presented below (the company's fiscal year ends on December 31):
|
| 2021 |
Sales revenue | $ | 7,040,000 |
Cost of goods sold |
| 4,576,000 |
Administrative expense |
| 1,280,000 |
Selling expense |
| 576,000 |
Loss due to inventory write-down |
| 56,000 |
Interest revenue |
| 240,000 |
Interest expense |
| 320,000 |
On July 1, 2021, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2021, for $78,000 more than their book value. Results of operations for the component (included in the above account balances) were as follows:
| 1/1/20219/30/2021 |
| ||||
Sales revenue |
| $ | 640,000 |
|
|
|
Cost of goods sold |
|
| 544,000 |
|
| |
Administrative expense |
|
| 80,000 |
|
| |
Selling expense |
|
| 32,000 |
|
| |
Operating loss before taxes |
| $ | (16,000 | ) |
|
|
Income taxes have not yet been recorded.
Required
Calculate the following items as they would be reported on a multiple-step income statement for the Chatham Company for 2021, including income taxes computed at 20%. EPS disclosures are not required.
- Gross profit
- Operating Income
- Income from Continuing Operations before Taxes
- Income Tax Expense
- Income (Loss) from Discontinued Operations
- Net Income
Provide your answers and show your work on the following page.
PROBLEM 3, continued
- Gross profit
- Operating Income
- Income from Continuing Operations before Taxes
- Income Tax Expense
- Income (Loss) from Discontinued Operations
- Net Income
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