Counting Crows Ltd. provided the following information for the year 2019. Retained earnings, January 1 answer below »

Counting Crows Ltd. provided the following information for the year 2019.

Retained earnings, January 1, 2015………………………………………………….£ 600,000

Administrative expenses……………………………………………………………….240,000

Selling expenses………………………………………………………………………..300,000

Sales revenue…………………………………………………………………………1,900,000

Cash dividends declared………………………………………………………………..80,000

Cost of goods sold…………………………………………………………………….850,000

Gain on sale of investments…………………………………………………………….62,700

Loss on discontinued operations……………………………………………………….75,000

Rent revenue……………………………………………………………………………40,000

Unrealized holding gain on non-trading equity securities……………………………..17,000

Income tax applicable to continuing operations………………………………………187,000

Income tax benefit applicable to loss on discontinued operations…………………….25,500

Income tax applicable to unrealized holding gain on non-trading equity securities……2,000

Weighted-average shares outstanding………………………………………………..100,000

Accounting

Prepare (a) an income statement for 2019, (b) a retained earnings statement for 2019, and (c) a statement of comprehensive income using the two statement format.

Analysis

Explain how income statement subheads can provide useful information to financial statement readers.

Principles

In a recent meeting with its auditor, Counting Crows’ management argued that the company should be able to prepare a pro forma income statement, with some one-time administrative expenses reported similar to discontinued operations. Is such reporting consistent with the qualitative characteristics of accounting information as discussed in the Conceptual Framework? Explain.

Counting Crows Ltd provided the following information for the year

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