The following information is related to Dickinson Company for 2020. Retained earnings balance, January 1, 2020 $980,000
Sales revenue 25,000,000
Cost of goods sold 16,000,000
Interest revenue 70,000
Selling and administrative expenses 4,700,000
Write-off of goodwill 820,000
Income taxes for 2020 1,244,000
Gain on the sale of investments 110,000
Loss due to flood damage 390,000
Loss on the disposition of the wholesale division (net of tax) 440,000
Loss on operations of the wholesale division (net of tax) 90,000
Dividends declared on common stock 250,000
Dividends declared on preferred stock 80,000

Dickinson Company decided to discontinue its entire wholesale operations (considered a discontinued operation) and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2020, there were 500,000 shares of common stock outstanding all year.

Required:
Prepare a multiple-step income statement and a retained earnings statement.

Dickson Company

Multi-step Income Statement for the year ended December 31, 2020:

Sales revenue                                      $25,000,000

Cost of goods sold                                 16,000,000

Gross profit                                            $9,000,000

Interest revenue                                            70,000

Total revenue                                        $9,070,000

Selling and

administrative expenses 4,700,000

Write-off of goodwill           820,000   $5,520,000

Income from operations                      $3,550,000

Gain on the sale of investments                110,000

Loss due to flood damage                      (390,000)

Income before taxes                              3,270,000

Income taxes for 2020                          1,244,000

Net Income                                         $2,026,000

Loss on the disposition of

 the wholesale division (net of tax)      (440,000)

Loss on operations of the

 wholesale division (net of tax)              (90,000)

Comprehensive Income                    $1,496,000

EPS = $2.992

Statement of Retained Earnings for the year ended December 31, 2020:

Comprehensive Income                    $1,496,000

Retained earnings balance, Jan, 1         980,000

Dividends: common stock 250,000

Dividends: preferred stock 80,000     (330,000)

Retained earnings, December 31    $2,146,000

Explanation:

a) Data and Calculations:

Retained earnings balance, January 1, 2020 $980,000

Sales revenue 25,000,000

Cost of goods sold 16,000,000

Interest revenue 70,000

Selling and administrative expenses 4,700,000

Write-off of goodwill 820,000

Income taxes for 2020 1,244,000

Gain on the sale of investments 110,000

Loss due to flood damage 390,000

Loss on the disposition of the wholesale division (net of tax) 440,000

Loss on operations of the wholesale division (net of tax) 90,000

Dividends declared on common stock 250,000

Dividends declared on preferred stock 80,000

b) EPS = $2.992 ($1,496,000/500,000 shares)