Question

Duke Company's records show the following account balances at December 31, 2011:
Sales................................................................................. $15,000,000
Cost of goods sold.............................................................. 9,000,000
General and administrative expenses.................................. 1,000,000
Selling expenses..................................................................... 500,000
Interest expense..................................................................... 700,000

Income tax expense has not yet been determined. The following events also occurred during 2011. All transactions are material in amount.
1. $300,000 in restructuring costs were incurred in connection with plant closings.
2. The company operates a factory in South America. During the year, the foreign government took over (expropriated) the factory and paid Duke $1,000,000, which was one-fourth of the book value of the assets involved.
3. Inventory costing $400,000 was written off as obsolete. Material losses of this type are not considered to be unusual.
4. It was discovered that depreciation expense for 2010 was understated by $50,000 due to a mathematical error.
5. The company experienced a foreign currency translation adjustment loss of $200,000 and had unrealized gains on securities available for sale of $180,000.

Required:
Prepare a combined multiple-step statement of income and comprehensive income for 2011. The company's effective tax rate on all items affecting comprehensive income is 40%. Each component of other comprehensive income should be displayed net of tax. Ignore EPS disclosures.



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  • CreatedJune 24, 2013
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