The trial balance of Scan House, Inc. included the following selected accounts as of December 31, 2020: Debits Credits Sales Revenue 16,755,000 Interest Revenue 75,000 Gain on sale of investments 150,000 Unrealized gains on investments 200,000 Other Income * 1,200,000 Foreign currency translation losses 125,000 Cost of Goods Sold 11,635,000 Selling expenses 975,000 Goodwill impairment loss 550,000 Interest Expense 60,000 Administrative Expense** 780,000 Loss on sale of land 225,000 Dividends declared 175,000 Additional information: * Other Income consists of income from discontinued operations. This includes $900,000 of income from operations and a $300,000 gain on the sale of investments. ** Administrative expense includes a $150,000 expense that was a correction of an error made in the 2018 Income Statement, but discovered during 2020. Retained Earnings balance: January 1, 2020 = $725,000. ScanHouse had 600,000 shares of common stock outstanding throughout the year and 1,000,000 shares of common stock authorized. Income tax expense had not yet been accrued. The effective tax rate is 21%. Required: 1. Prepare a single, continuous 2020 statement of comprehensive income for Scan House, Inc., including income tax expense and Earnings Per Share (EPS). Use a multiple-step income statement format. 2. Prepare a 2020 statement of retained earnings for Scan House, Inc.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The
| Debits | Credits |
| Sales Revenue | 16,755,000 | |
| Interest Revenue | 75,000 | |
| Gain on sale of investments | 150,000 | |
| Unrealized gains on investments | 200,000 | |
| Other Income * | 1,200,000 | |
| Foreign currency translation losses | 125,000 | |
| Cost of Goods Sold | 11,635,000 | |
| Selling expenses | 975,000 | |
| 550,000 | ||
| Interest Expense | 60,000 |
| Administrative Expense** | 780,000 | |
| Loss on sale of land | 225,000 | |
| Dividends declared | 175,000 |
Additional information:
* Other Income consists of income from discontinued operations. This includes $900,000 of income from operations and a $300,000 gain on the sale of investments.
** Administrative expense includes a $150,000 expense that was a correction of an error made in the 2018 Income Statement, but discovered during 2020.
ScanHouse had 600,000 shares of common stock outstanding throughout the year and 1,000,000 shares of common stock authorized. Income tax expense had not yet been accrued.
The effective tax rate is 21%.
Required:
1. Prepare a single, continuous 2020 statement of comprehensive income for Scan House, Inc., including income tax expense and Earnings Per Share (EPS). Use a multiple-step income statement format.
2. Prepare a 2020 statement of retained earnings for Scan House, Inc.
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