Presented below is information related to Bubbles Scuba Diving Inc. for its fiscal year ending September 30, 2020. During the year, the Board of Directors decided to discontinue the operations of its entire Hidden Treasure division but continue to operate its Seaweed operations. In March 2020, Bubbles Scuba Diving Inc. sold the Hidden Treasure operations to Deep Down Company. The following amounts were taken from Bubbles’ general ledger:

Administrative expenses 24,000
Cost of goods sold 930,000
Dividends declared on common stock 27,000
Dividend income 23,050
Overstatement of income due to inventory error in 2016. 15,750

Gain from disposal of Hidden Treasure division. 82, 150
Gain on sale of fixed assets 9,500
Loss from operations of Hidden Treasure division. 230,000

Retained earnings, October 1, 2019. 750,950
Sales 1,500,00
Sales discounts 33,000
Selling expenses 54,000
Unrealized gain on foreign currency translation 4,250

Write-off of inventory due to obsolescence 79,000

Additional information:

• All amounts are before tax. Assume a 36% tax rate when calculating income taxes. This

  includes items such as ordinary income, discontinued operations, other comprehensive

  income and prior period adjustments if applicable.

• There are 30,000 shares of common stock outstanding for the Earnings per Share (EPS)

  disclosure. All EPS amounts should be rounded to pennies.

   Use appropriate headings on all financial statements
  
  

1. Prepare an Income Statement (multi-step of course) for the year ended September 30, 2020.

2. Prepare a separate Statement of Comprehensive Income for the year ended September 30, 2020.

   (Use the two-statement approach)

3. Prepare a Statement of Retained Earnings for the year ended September 30, 2020.

Answer rating: 100% (QA)

Multistep Income Statement Revenue 2020 Gross sales 1500000 Less sales returns and allowances 33000 ... View the full answer