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25 July, 11:40

An inexperienced accountant for Cheyenne Corp. showed the following in the income statement: income before income taxes $371,000 and unrealized gain on available-for-sale securities (before taxes) $88,700. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 35% tax rate. Prepare a correct statement of comprehensive income.

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  1. 25 July, 11:46
    0
    An correct statement was prepared for a comprehensive income which is given below.

    Explanation:

    Solution

    Given that:

    Cheyenne Corporation

    Correct Statement of Comprehensive/General Income

    Income before income taxes $371,000

    The less Tax ($371,000 * 35%) $129,850

    The Net Income $241,150

    Other Comprehensive income

    Unrealized profit on present for

    sales securities, net of tax $57,655

    The comprehensive income

    ($241,150 + $57,655) $298,805

    Note:

    The Unrealized profit on present for sales securities, net of tax is given as

    = ($88,700 * (100% - 35%))

    =$88,700 * 65%

    =$57,655
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