Problem 3

The following information was taken from the records of Cantu Inc. for the year 2014. Income tax applicable to income

from continuing operations $261,800; income tax applicable to loss on discontinued operations $35,700; income tax

applicable to extraordinary gain $45,220; income tax applicable to extraordinary loss $28,560; and unrealized holding

gain on available-for-sale securities $21,000. Shares outstanding during 2014 were 100,000. (10 points)

a) Prepare a multiple-step income statement for 2014. (6 points)

b) Prepare a retained earnings statement for 2014. (6 points)

1. This is a confidential document, it is for your use only, and you cannot share it with anyone

else. Sharing it with anyone else in any way will result in immediate failure.

2. This is an individual exam. No cheating of any kind.

3. This exam ends at 8:30 PM on 5

th August 2021. If it is submitted late, you will be severely

penalized.

4. Course instructor reserves the right to reject any exam for any reason.

Good Luck

Extraordinary gain $133,000 Cash dividends declared $ 210,000

Loss on discontinued operations 105,000 Retained earnings January 1, 2014 840,000

Administrative expenses 336,000 Cost of goods sold 1,190,000

Rent revenue 56,000 Selling expenses 420,000

Extraordinary loss 84,000