Willie Nelson, Jr., controller for Jenkins Corporation, is preparing the company's financial statements at year-end. Currently, he is focusing on the income statement and determining the format for...

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Willie Nelson, Jr., controller for Jenkins Corporation, is preparing the company's financial statements at year-end. Currently, he is focusing on the income statement and determining the format for reporting comprehensive income. During the year, the company earned net income of $400,000 and had unrealized gains on available-for-sale securities of $15,000. In the previous year, net income was $410,000, and the company had no unrealized gains or losses.

Instructions(a)

Show how income and comprehensive income will be reported on a comparative basis for the current and prior years, using the two statement format.

(b)

Show how income and comprehensive income will be reported on a comparative basis for the current and prior years, using the one statement format.

(c)

Which format should Nelson recommend?

Answered Same DayFeb 13, 2021

Answer To: Willie Nelson, Jr., controller for Jenkins Corporation, is preparing the company's financial...

Khushboo answered on Feb 14 2021
157 Votes
The entity is earning a net income of $400,000 which should be reflected in the income statement and the tax liability will be calculated on the basis of this income.
The amount of unrealized gains on available-for-sale securities is $15000 which would be credited to the comprehensive income statement and it must be brought forward to the next year. The profit or loss on this securities should be reflected when the original sale will occur.
a) Separate statement showing net income and comprehensive income separately:
    Particulars
    Current Year ($)
    Previous Year ($)
    Net Income
    400,000
    410,000
Statement...
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