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.

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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