Preparing an Income Statement and a Statement of Comprehensive Income

The following pretax amounts are taken from the adjusted trial balance of Avoca Auto Corp. at December 31, 2020, its annual year-end.

Sales revenue	$390,000
Cost of goods sold	165,000
Operating expenses	120,000
Gain on debt retirement	30,000
Interest expense	12,000
Loss from discontinued operations	75,000
Retained earnings balance, December 31, 2019	45,000
Dividends declared and paid	37,500
Unrealized holding gain on debt investment securities, net of tax	6,000
Common stock, weighted average shares outstanding	15,000 shares

Required

a. Prepare a single-step income statement. Assume an average 25% tax rate on all items. Include earnings per share disclosures. b. Prepare a comprehensive income statement by showing a separate but consecutive statement of comprehensive income. Ignore earnings per share disclosures. c. Compute the ending retained earnings balance at December 31, 2020.

• Enter revenues and gains and expenses and losses in the order of the largest dollar amount to the smallest dollar amount.
• Do not use negative signs with any of your answers.
• Enter the answers for per share amounts in dollars and cents, rounded to the nearest penny.

• Single-step Income Statement
• Statement of Comprehensive Income
• Retained Earnings Balance

a. Prepare a single-step income statement. Assume an average 25% tax rate on all items. Include earnings per share disclosures.

Avoca Auto Corp.
Income Statement
For the Year Ended December 31, 2020
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Total revenues and gains
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Total expenses and losses
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Income from continuing operations
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Per share:
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax
Comprehensive incomeCost of goods soldDiscontinued operationsExpenses and lossesGain on debt retirementGain on sale of fixed assetIncome before income taxesIncome from continuing operationsIncome tax expenseInterest expenseLoss from discontinued component, net of tax savingsNet incomeOperating expensesRevenues and gainsSales revenueService revenueUnrealized holding gain on securities, net of tax