Concept Check
Comprehensive on Income Statement
ABC Inc. reported during 2020 the following information:
4%, Preferred Stocks, $50, par
Common Stocks, $2 par
Paid-in Capital in excess of par
Retained Earnings
Less: Treasury Stocks ($10 cost)
Total Stockholders’ Equity
2019
$500,000
1,000,000
800,000
400,000
$2,700,000
2020
$500,000
1,000,000
800,000
????
(100,000)
?????
 The firm generated net sales of $2,200,000 during 2020. Its cost of goods
sold amounts to $600,000.
 The total operating expenses amount to $700,000 out of which $200,000 is
allocated for depreciation and amortization expense.
 ABC reported during 2020: interest expense $50,000, gain on disposal of
plant assets of $10,000, dividend revenue on preferred stocks of $40,000,
and interest revenue of $20,000.
 ABC maintains a retention ratio of 20%.
 ABC Inc. utilizes the U.S progressive tax rate system.
Taxable Income
Marginal Tax Rate
$0-$50,000
15%
$50,001-$75,000
25%
$75,001-$100,000
34%
$100,001-$335,000
39%
$335,001-$10,000,000
34%
$10,000,001-$15,000,000
35%
$15,000,001-$18,333,333
38%
Over $18,333,333
35%
Instructions:
1- Compute ABC’s EPS.
2- Compute ABC’s DPS.
3- Compute the ending balance in retained earnings for 2020.