Question

For the year ended December 31, 2017, Transformers Inc. reported the following: Net income $300,000 Preferred dividends declared 50,000 Common dividend declared 10,000 Unrealized holding loss, net of tax 5,000 Retained earnings 400,000 Common stock 200,000 Accumulated Other Comprehensive Income, Beginning Balance 25,000

What would Transformers report as its ending balance of Accumulated Other Comprehensive Income?

a. $30,000
b. $25,000
c. $20,000
d. $5,000

Answer 1

Answer: The correct answer is C i.e. $20,000

Step-by-step explanation:

Beginning Balance of other comprehensive Income = $25,000

Unrealized holding loss, net of tax = $5,000

Ending Balance of Accumulated other comprehensive Income = Beginning Balance - Unrealized holding loss, net of tax

Ending Balance of Accumulated other comprehensive Income = $25,000 - $5,000

Ending Balance of Accumulated other comprehensive Income = $20,000