Ac550 Week 2

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Chapter 4:
E4-8,
Instructions
(a) Prepare a multiple-step income statement for 2012. Assume that 60,000 shares of common stock are outstanding. Brokaw Corp
Income Statement
For The Year Ended December 31, 2012
Sales Revenue
Net Sales $1,200,000
Cost of Goods Sold 780,000
Gross Profit 420,000
Operating Expenses
Selling Expenses $65,000
Administration Expenses $48,000 113,000
Income from operations 307,000
Other revenues and gains
Dividend Revenues 20,000
Interest Revenues 7,000 27,000
334,000
Other expenses and losses
Write-off of inventory due to obsolescence 80,000 80,000
Income before income tax and extraordinary item 254,000
Income tax 86,360
Income before Extraordinary Item 167,640
Extraordinary Items:
Casualty loss 50,000
Less: Income tax reduction 17,000 33,000
Net Income 134,640

Per shares of common stock:
Income before extraordinary item: (167,640/60,000) $2.79
Extraordinary item, net of tax: (33,000/60,000) .55 Net Income (134,640/60,000) 2.24

(b.) Prepare a retained earnings statement for 2012.
Brokaw Corp.
Retained Earnings Statement
For the Year Ended December 31, 2012

Retained Earnings, Jan. 1, as reported$980,000
Correction for overstatement of net income in prior period(-13600 tax) 26,400
Retained earnings, Jan. 1 as adjusted 953,600
Add: Net Income 134,640
1,088,240
Less: Dividends declared 45,000
Retained earnings, Dec. 311,043,240

P4-1,
Prepare a multiple-step...
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