Reference no: EM132880448

Problem - Comprehensive: Income Statement and Supporting Schedules - The following is a partial list of the account balances, after adjustments, of Silvoso Company on December 31, 2019:

Depreciation Expense: Buildings and Office Equipment	$14,500	Office Supplies Expense	1,400
Sales Commissions and Salaries	18,200	Common Stock, $10 par	80,000
Inventory, January 1, 2019	37,800	Loss on Sale of Office Equipment (pretax)	5,000
Sales Supplies Used	5,600	Insurance and Property Tax Expense	8,500
Retained Earnings, January 1, 2019	83,700	Sales	328,600
Purchases Returns and Allowances	6,200	Rent Revenue	6,900
Bad Debts Expense	2,700	Office and Administrative Salaries Expense	32,000
Transportation-in	13,500	Promotion and Advertising Expense	17,000
Sales Discounts Taken	4,900	Purchases Discounts Taken	4,100
Purchases	173,000	Depreciation Expense: Sales Equipment	9,600
Delivery Expense	7,700	Interest Expense	3,700

The following information is also available:

1. The company declared and paid a $0.60 per share cash dividend on its common stock. The stock was outstanding the entire year.

2. A physical count determined that the December 31, 2019, ending inventory is $34,100.

3. A tornado destroyed a warehouse, resulting in a pretax loss of $12,000. The last tornado in this area had occurred 10 years earlier.

4. On May 1, 2019, the company sold an unprofitable division (R). From January through April, Division R (a major component of the company) had incurred a pretax operating loss of $8,700. Division R was sold at a pretax gain of $10,000.

5. The company is subject to a 30% income tax rate. Its income tax expense for 2019 totals $4,230. The breakdown is as follows:

Income Tax Expense (Credit) Related to Amount

Continuing income $ 7,440

Operating loss of Division R (2,610)

Gain on sale of Division R 3,000

Gain on sale of Division R (3,600)

$4,230

6. The company had average shareholders' equity of $150,000 during 2019.

Required -

1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense.

2. Prepare a 2019 multiple-step income statement for Silvoso. Include any related note to the financial statements.

3. Prepare a 2019 retained earnings statement.

4. What was Silvoso's return on common equity for 2019? What is your evaluation of Silvoso's return on common equity if last year it was 10%?