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Sportswear, Inc
Sportswear, Inc. reports the following information for 20x9: sales revenue $2,000,000; CGS $350,000; operating expenses $800,000; and an unrealized holding loss on available-for-sale securities of $50,000. The company paid cash dividends of $10,000. The company's January 1, 20x9 balances were: Common stock, $500,000; accumulated other comprehensive income $30,000; and retained earnings, $300,000. No stock was issued during 20x9.
(a) Prepare a statement of comprehensive income, using the one statement approach.
(b) Prepare the stockholders' equity section of Sportswear, Inc.'s Balance Sheet.
Expert Solution
| a) | |
| Sportswear Inc. | |
| Comprehensive income statement | |
| For the year ended Dec 31, 20x9 | |
| Sales | 2,000,000 |
| Less: Cost of good sold | 350,000 |
| Gross Profit | 1,650,000 |
| Less: Operating Expenses | 800,000 |
| Net operating income | 850,000 |
| Less: Tax @0 | 0 |
| Net Income | 850,000 |
| Other comprehensive income | 30,000 |
| Unrealized Holding Loss on available for sale securities | -50000 |
| Total comprehensive income for the year | 830,000 |
| b) Sportswear Inc. | ||||
| Statement of Stockholders Equity | ||||
| Total | Retained Earnings | Accumulated other comprehensive income | Common Stock | |
| Beginning balance | 830,000 | 300,000 | 30,000 | 500,000 |
| Net income | 850,000 | 850,000 | ||
| Less: | ||||
| Unrealized holding loss | -50000 | -50000 | ||
| Cash dividend | -10000 | -10000 | ||
| Ending balance | 1,620,000 | 1,140,000 | -20,000 | 500,000 |
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