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