Below is an incorrect income statement and an incorrect statement of stockholders’ equity for Gill Corporation for the year ended December 31, 2017.
Sales, net $600,000
Cost of goods sold (300,000)
Selling expenses (100,000)
Correction of error in reporting 2010 net income (30,000)
Loss on impairment of goodwill (60,000)
Cumulative effect to January 1, 2017, of a change in accounting principle 20,000
Loss on discontinued operations(10,000)
Unrealized loss on available-for-sale marketable securities (40,000)
Pretax income $100,000
Income tax expense at 30% (30,000)
Net income $70,000
Additional information:
1. Common stock, no par, is $700,000 throughout the year. 2. Retained earnings at December 31, 2016, was reported as 120,000.
3. No dividends were declared during the year.
4. There was no balance in accumulated other comprehensive income at December 31, 2016.
5. Gill Corporation had 10,000 shares of common stock outstanding throughout the year.
A. Prepare a corrected multi-step income statement in good form. If necessary information is missing, state a reasonable assumption and apply it.
B. Prepare a correct statement of stockholders’ equity in good form. If necessary information is missing, state a reasonable assumption and apply it.