Can I please have help with the following problem.
Bee Spears Clothing Stores reported sales of $250,000 cost of goods sold of $150,000, operating expenses of $25,000, income tax expense rate of 30% in calendar year 2006, and an unrealized loss from marketable securities (available-for-sale) of $20,000.
1. Prepare a statement of comprehensive income using a single income statement format.
2. Prepare a statement of comprehensive income using a two-income statement format.
I do not know what the difference between a single income and a two-income statement format is.
Sure! I can help you with that.
1. Single Income Statement Format:
In a single income statement format, all expenses and revenues are presented in a single statement. To prepare the statement of comprehensive income in this format, you need to list all the components of revenue, expenses, gains, and losses.
Here's how you can do it:
Statement of Comprehensive Income for Bee Spears Clothing Stores for the year ended December 31, 2006:
Revenue:
Sales: $250,000
Expenses:
Cost of goods sold: $150,000
Operating expenses: $25,000
Income tax expense: ($250,000 - $150,000 - $25,000) * 30% = $22,500
Unrealized loss from marketable securities: $20,000
Net Income before Other Comprehensive Income: $250,000 - $150,000 - $25,000 - $22,500 - $20,000 = $32,500
2. Two-Income Statement Format:
In a two-income statement format, the gains and losses from certain activities, such as unrealized gains or losses on marketable securities, are presented separately from the core operations of the business. This format provides more transparent reporting by separating items that are not a direct result of business operations.
Here's how you can do it:
Statement of Comprehensive Income for Bee Spears Clothing Stores for the year ended December 31, 2006:
Income Statement:
Revenue:
Sales: $250,000
Expenses:
Cost of goods sold: $150,000
Operating expenses: $25,000
Income tax expense: ($250,000 - $150,000 - $25,000) * 30% = $22,500
Net Income: $250,000 - $150,000 - $25,000 - $22,500 = $52,500
Other Comprehensive Income:
Unrealized loss from marketable securities: $20,000
Total Comprehensive Income: Net Income + Other Comprehensive Income
Total Comprehensive Income: $52,500 - $20,000 = $32,500
I hope this helps! Let me know if you have any further questions.