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HW 1
(Computation of Net Income)
Presented below are changes in all the account balances of Jackson Furniture Co. during the current year, except for retained earnings.
|
Increase (Decrease) |
Cash |
$83,310 |
Accounts Payable |
|
Accounts Receivable (net) |
46,620 |
Bonds Payable |
84,140 |
|
Inventory |
133,170 |
Common Stock |
125,350 |
|
Investments |
(49,380) |
Additional Paid-in Capital |
15,800 |
Compute the net income for the current year, assuming that there were no entries in the Retained Earnings account except for net income and a dividend declaration of $24,640 which was paid in the current year.
$
(Income Statement Items)
Presented below are certain account balances of Paczki Products Co.
|
Rental revenue |
$6,810 |
Sales discounts |
$7,980 |
||
|
Interest expense |
12,910 |
Selling expenses |
99,890 |
||
|
Beginning retained earnings |
114,500 |
Sales |
390,550 |
||
|
Ending retained earnings |
134,230 |
Income tax |
31,800 |
||
|
Dividend revenue |
72,590 |
Cost of goods sold |
185,470 |
||
|
Sales returns |
12,550 |
Administrative expenses |
82,980 |
From the foregoing, compute the following in a periodic inventory environment: (a) total net revenue, (b) net income, (c) dividends declared during the current year.
|
(a) |
Total net revenue |
$ |
|
(b) |
||||||
|
Net income |
|
(c) |
Dividends declared |
(Multiple-step and Extraordinary Items)
The following balances were taken from the books of Parnevik Corp. on December 31, 2012.
|
Interest revenue |
$92,800 |
Accumulated depreciation-building |
28,000 |
||
|
51,000 |
Notes receivable |
155,000 |
|||
|
1,341,100 |
201,400 |
||||
|
Accounts receivable |
150,000 |
Accounts payable |
170,000 |
||
|
Prepaid insurance |
20,000 |
Bonds payable |
100,000 |
||
|
Sales returns and allowances |
156,000 |
Administrative and general expenses |
97,300 |
||
|
Allowance for doubtful accounts |
7,000 |
Accrued liabilities |
32,000 |
||
|
52,500 |
73,100 |
||||
|
Land |
Notes payable |
||||
|
Equipment |
200,000 |
Loss from earthquake damage |
|||
|
Building |
1 40,000 |
(extraordinary item) |
130,000 |
||
|
629,400 |
Common stock |
500,000 |
|||
|
Accumulated depreciation-equipment |
40,000 |
Retained earnings |
21,000 |
Assume the total effective tax rate on all items is 34%.
Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.
(Round per share of common stock to 2 decimal places, e.g. 0.25 and all other answers to zero decimal places, e.g. 2,250. For per share of common stock use either a negative sign preceding the number, e.g. -0.45 or parenthesis e.g. (0.45) for negative numbers. Enter all other amounts as positive amounts and subtract where necessary. For multiple entries list from largest to smallest amounts, e.g. 10, 5, 1.)
|
PARNEVIK CORP. |
||
|
Income Statement |
||
|
For the Year Ended December 31, 2012 |
||
|
Sales Revenue |
||
|
Less: |
Net sales revenue
Gross profit
Operating Expenses
Income from operations
Other Revenues and Gains
Other Expenses and Losses
Income before taxes and extraordinary item
Income before extraordinary item
Extraordinary item
Less applicable tax reduction
$
Per share common stock:
$
Net income
$
(Retained Earnings Statement)
McEntire Corporation began operations on January 1,
2009
. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.
| Dividends declared | ||
| 2009 |
$48,500 |
$ -0- |
|
2010 |
129,700 |
58,200 |
|
2011 |
160,100 |
54,600 |
The following information relates to 2012.
|
Income before income tax |
$245,000 |
|
Prior period adjustment: understatement of 2010 depreciation expense (before taxes) |
$26,100 |
|
Cumulative decrease in income from change in inventory methods (before taxes) |
$41,400 |
|
Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2013) |
$100,000 |
|
Effective tax rate |
40% |
(a)
Prepare a 2012 retained earnings statement for McEntire Corporation.
(Enter all amounts as positive amounts and subtract where necessary.)
|
McENTIRE CORPORATION |
|
Retained Earnings Statement |
|
Correction for depreciation error (net of taxes) |
|
Balance, January 1, as adjusted |
|
Add: |
|
Deduct: |
|
Balance, December 31 |
|
Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet? |
|
Total retained earnings |
(Earnings per Share)
At December 31, 2011, Schroeder Corporation had the following stock outstanding.
|
8% cumulative preferred stock, $100 par, 108,172 shares |
$10,817,200 |
|
Common stock, $5 par, 4,031,160 shares |
20,155,800 |
During 2012, Schroeder’s did not issue any additional stock. The following also occurred during 2012.
|
Income from continuing operations before taxes |
$31,109,600 |
|
Discontinued operations (loss before taxes) |
3,277,800 |
|
Preferred dividends declared |
865,376 |
|
Common dividends declared |
2,284,000 |
| Effective tax rate |
35% |
Compute earnings per share data as it should appear in the 2012 income statement of Schroeder Corporation.
(Round answers to 2 decimal place, e.g. 5.25. For negative numbers use either a negative sign preceding the number, e.g. -0.45 or parenthesis, e.g. (0.45).)
Earnings per share
(Comprehensive Income)
Armstrong Corporation reported the following for 2012: net sales $1,216,800; cost of goods sold $769,100; selling and administrative expenses $348,900; and an unrealized holding gain on available-for-sale securities $20,300.
Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share.
(Enter all amounts as positive amounts and subtract where necessary.)
|
ARMSTRONG CORPORATION |
|
Income Statement and Statement of Comprehensive Income |
|
Gross Profit |
|
Unrealized holding gain |
|
Comprehensive income |
