Question

The following information was taken from the records of Waterway Inc. for the year 2020: Income tax applicable to income from continuing operations $216,920; income tax applicable to loss on discontinued operations $29,580, and unrealized holding gain on available-for-sale securities (net of tax) $17,400.
Gain on sale of equipment $110,200
Cash dividends declared $174,000
Loss on discontinued operations 87,000
Retained earnings January 1, 2020 2,640,000
Administrative expenses 278,400
Cost of goods sold 986,000
Rent revenue 46,400
Selling expenses 348,000
Loss on write-down of inventory 69,600
Sales Revenue 2,204,000

Shares outstanding during 2020 were 100,000.

Required:
Prepare a single-step income statement.

Answer 1

Answer:

                                Waterway Inc.

                    Single-step income statement

Particular                                                         Amount

Sales Revenue                                               $2,204,000

Add: Rent Revenue                                        $46,400

Total Revenue                                                $2,250,400

Less: Expense

Cost of goods sold             $986,000

Selling Expense                  $348,000

Administrative Expenses    $278,400

Total Expenses                                                $1,612,400

Income from operations                                  $638,000

Other revenues and gains

Add: Gain on sale of equipment                     $110,200

Other expenses and losses

Less: Loss on write-down of inventory           $69,600

Income from continuing operations              $678,600

before income taxes    

Less: Income taxes                                            $216,920

Income from continuing operations               $461,680

Discontinued operations:

Loss on discontinued operations      $87,000

Income tax at loss on discontinued  $29,580 $116,580

operation

Net Income                                                         $345,100

Per share of common stock:

Income from continuing operations (income from continuing operations /share outstanding = ($461,680/ 100000) = $4.62

Loss on discontinued operations, net of tax ($116,580 /100000) = $1.17

Net Income ($345,100/100,000) = $3.45