Condensed balance sheet and income statement data for Kersenbrock Corporation appear below.
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
a) The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
b) All dividends were paid in cash.
Instructions:
Compute the following ratios for 2008 and 2009. (Weighted-average-common shares in 2009 were 32,000 and in 2008 were 31,000.)
(1) Profit margin
(2) Asset turnover
(3) Earnings per share
(4) Price-earnings
(5) Payout
(6) Debt to total assets
Click here for the solution: Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
Showing posts with label Income Statement. Show all posts
Showing posts with label Income Statement. Show all posts
Thursday, January 14, 2016
Monday, October 26, 2015
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
P 21-11 Prepare a statement of cash flows; direct method
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also.
AND SO ON
Additional information from the accounting records:
a. During 2011, $6 million of customer accounts were written off as uncollectible.
b. Investment revenue includes Arduous Company's $6 million share of the net income of Demur Company, an equity method investee.
c. Treasury bills were sold during 2011 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
d. A machine originally costing $70 million that was one-half depreciated was rendered unusable by a rare flood. Most major components of the machine were unharmed and were sold for $17 million.
e. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million.
f. The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment.
g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.
h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million. i. $60 million of bonds were retired at maturity. j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.
Required:
Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2011. Present cash flows from operating activities by the direct method. (A reconciliation schedule is not required.)
Click here for the solution: The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also.
AND SO ON
Additional information from the accounting records:
a. During 2011, $6 million of customer accounts were written off as uncollectible.
b. Investment revenue includes Arduous Company's $6 million share of the net income of Demur Company, an equity method investee.
c. Treasury bills were sold during 2011 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
d. A machine originally costing $70 million that was one-half depreciated was rendered unusable by a rare flood. Most major components of the machine were unharmed and were sold for $17 million.
e. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million.
f. The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment.
g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.
h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million. i. $60 million of bonds were retired at maturity. j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.
Required:
Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2011. Present cash flows from operating activities by the direct method. (A reconciliation schedule is not required.)
Click here for the solution: The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method.
Rashid Corporation
Income Statement
For Year ended Dec. 31, 2009
Sales 504,000
Cost of goods sold 327,600
Depreciation expense 42000
other operating expenses 125500 (495100)
other gains (losses):
Gain on sale of equipment 7200
Income before taxes 16100
Income tax expense (4800)
Net income 11,300
Rashid Corporation
Balance Sheets
For Year ended Dec. 31, 2009
2009 2008
Assets
Cash 64650 55800
Accounts Receivable 21000 29000
Inventory 58000 52100
Equipment 240000 222000
Accumulated depreciation (106000) (96000)
Total assets 277650 262900
Liabilities:
Accounts Payable 28400 23700
Income taxes payable 1050 1200
Total Liabilities 29450 24900
Equity
Common Stock 106000 106000
Capital in excess of par value 18000 18000
Retained earnings 124200 114000
Total equity 248200 238000
Click here for the solution: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Rashid Corporation
Income Statement
For Year ended Dec. 31, 2009
Sales 504,000
Cost of goods sold 327,600
Depreciation expense 42000
other operating expenses 125500 (495100)
other gains (losses):
Gain on sale of equipment 7200
Income before taxes 16100
Income tax expense (4800)
Net income 11,300
Rashid Corporation
Balance Sheets
For Year ended Dec. 31, 2009
2009 2008
Assets
Cash 64650 55800
Accounts Receivable 21000 29000
Inventory 58000 52100
Equipment 240000 222000
Accumulated depreciation (106000) (96000)
Total assets 277650 262900
Liabilities:
Accounts Payable 28400 23700
Income taxes payable 1050 1200
Total Liabilities 29450 24900
Equity
Common Stock 106000 106000
Capital in excess of par value 18000 18000
Retained earnings 124200 114000
Total equity 248200 238000
Click here for the solution: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Wednesday, October 14, 2015
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using the four major classifications listed to the right.
a. Payment of interest on notes payable
b. Exchange of land for patent
c. Sale of building at book value
d. Payment of dividends
e. Depreciation
f. Receipt of dividends on investment in stock
g. Receipt of interest on notes receivable
h. Issuance of capital stock
i. Amortization of patent
j. Issuance of bonds for land
k. Purchase of land
l. Conversion of bonds into common stock
m. Loss on sale of land
n. Retirement of bonds
Click here for the solution: An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
a. Payment of interest on notes payable
b. Exchange of land for patent
c. Sale of building at book value
d. Payment of dividends
e. Depreciation
f. Receipt of dividends on investment in stock
g. Receipt of interest on notes receivable
h. Issuance of capital stock
i. Amortization of patent
j. Issuance of bonds for land
k. Purchase of land
l. Conversion of bonds into common stock
m. Loss on sale of land
n. Retirement of bonds
Click here for the solution: An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp
Friday, October 9, 2015
Presented here are the components in Korinek Company’s income statement
ACC 290 Week 5 Assignment
BE5-1 Presented here are the components in Korinek Company’s income statement. Determine the missing amounts.
Sales Cost of Gross Operating Net
Revenue Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $12,100
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
Click here for the solution: Presented here are the components in Korinek Company’s income statement
BE5-1 Presented here are the components in Korinek Company’s income statement. Determine the missing amounts.
Sales Cost of Gross Operating Net
Revenue Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $12,100
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
Click here for the solution: Presented here are the components in Korinek Company’s income statement
Sunday, September 27, 2015
Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company
P16-32B Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company.
Requirement
1. Fill in the missing words (___) and amounts (X).
Click here for the solution: Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company
Requirement
1. Fill in the missing words (___) and amounts (X).
Click here for the solution: Certain item descriptions and amounts are missing from the monthly schedule of cost of goods manufactured and the income statement of Pinta Manufacturing Company
Thursday, September 24, 2015
An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
ACC 560 Week 9 Assignment
E13-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
Instructions
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
Click here for the solution: An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
E13-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.
(a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in stock.
(g) Receipt of interest on notes receivable.
(h) Issuance of capital stock.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into common stock.
(m) Loss on sale of land.
(n) Retirement of bonds.
Instructions
Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.
Click here for the solution: An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp
The income statement of Elbert Company is presented here
P13-3A The income statement of Elbert Company is presented here.
ELBERT COMPANY
Income Statement
For the Year Ended November 30, 2008
Sales $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,650,000
Additional information:
1. Accounts receivable increased $250,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $90,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2008, for Elbert Company, using the indirect method.
Click here for the solution: The income statement of Elbert Company is presented here
ELBERT COMPANY
Income Statement
For the Year Ended November 30, 2008
Sales $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,650,000
Additional information:
1. Accounts receivable increased $250,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $90,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2008, for Elbert Company, using the indirect method.
Click here for the solution: The income statement of Elbert Company is presented here
Sunday, September 20, 2015
Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
P14-3A Condensed balance sheet and income statement data for Kersenbrock Corporation appear below.
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the solution: Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the solution: Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
Friday, September 18, 2015
The following information was made available from the income statement and balance sheet of Lauren Company
1. The following information was made available from the income statement and balance sheet of Lauren Company.
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
Click here for the solution: The following information was made available from the income statement and balance sheet of Lauren Company
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
Click here for the solution: The following information was made available from the income statement and balance sheet of Lauren Company
Complete an Income Statement, Statement of Owner's Equity, and Balance Sheet using the information provided below for Rya’s Planning Services
Complete an Income Statement, Statement of Owner's Equity, and Balance Sheet using the information provided below for Rya’s Planning Services.
Cash………………………………….$21,500
Accounts Receivable………. 17,500
Office Supplies……………… … 500
Equipment…………………… …….15,000
Accounts Payable…………… . 9,750
Rya Page, Capital……………....28,200
Rya Page, Drawing……………… 5,000
Planning Fees Income……… …26,250
Office Supplies Expense……….. 200
Rent Expense……………………… … 800
Salaries Expense……………… …. 3,000
Utilities Expense……………… ….. 700
Click here for the solution: Complete an Income Statement, Statement of Owner's Equity, and Balance Sheet using the information provided below for Rya’s Planning Services
Cash………………………………….$21,500
Accounts Receivable………. 17,500
Office Supplies……………… … 500
Equipment…………………… …….15,000
Accounts Payable…………… . 9,750
Rya Page, Capital……………....28,200
Rya Page, Drawing……………… 5,000
Planning Fees Income……… …26,250
Office Supplies Expense……….. 200
Rent Expense……………………… … 800
Salaries Expense……………… …. 3,000
Utilities Expense……………… ….. 700
Click here for the solution: Complete an Income Statement, Statement of Owner's Equity, and Balance Sheet using the information provided below for Rya’s Planning Services
Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
P15-3A Condensed balance sheet and income statement data for Kersenbrock Corporation appear below.
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the solution: Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
KERSENBROCK CORPORATION
Balance Sheets
December 31
2009 2008 2007
Cash $ 25,000 $ 20,000 $ 18,000
Receivables (net) 50,000 45,000 48,000
Other current assets 90,000 95,000 64,000
Investments 75,000 70,000 45,000
Plant and equipment (net) 400,000 370,000 358,000
$640,000 $600,000 $533,000
Current liabilities $ 75,000 $ 80,000 $ 70,000
Long-term debt 80,000 85,000 50,000
Common stock, $10 par 340,000 310,000 300,000
Retained earnings 145,000 125,000 113,000
$640,000 $600,000 $533,000
KERSENBROCK CORPORATION
Income Statement
For the Year Ended December 31
2009 2008
Sales $740,000 $700,000
Less: Sales returns and allowances 40,000 50,000
Net sales 700,000 650,000
Cost of goods sold 420,000 400,000
Gross profit 280,000 250,000
Operating expenses (including income taxes) 235,000 220,000
Net income $ 45,000 $ 30,000
Additional information:
1. The market price of Kersenbrock's common stock was $4.00, $5.00, and $8.00 for 2007, 2008, and 2009, respectively.
2. All dividends were paid in cash.
Instructions
a) Compute the following ratios for 2008 and 2009. (1) Profit margin. (2) Asset turnover. (3) Earnings per share. (Weighted average common shares in 2009 were 32,000 and in 2008 were 31,000.) (4) Price-earnings. (5) Payout. (6) Debt to total assets.
b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2008 to 2009 of Kersenbrock Corporation.
Click here for the solution: Condensed balance sheet and income statement data for Kersenbrock Corporation appear below
Sunday, September 13, 2015
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s)
P4-6 Income statement presentation
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s):
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component's assets of $2 million. 500,000 shares of common stock were outstanding throughout 2011. Income tax expense has not yet been accrued. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2011, including EPS disclosures.
Click here for the solution: Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011
Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011 ($ in 000s):
In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $1.6 million and a gain on disposal of the component's assets of $2 million. 500,000 shares of common stock were outstanding throughout 2011. Income tax expense has not yet been accrued. The income tax rate is 30% on all items of income (loss).
Required:
Prepare a multiple-step income statement for 2011, including EPS disclosures.
Click here for the solution: Rembrandt Paint Company had the following income statement items for the year ended December 31, 2011
Wednesday, September 2, 2015
The Owl Corporation is planning for 20X2
The Owl Corporation is planning for 20X2. The firm expects to have the following financial result in 20X1 ($000).
INCOME STATEMENT
$ %
Revenue $37,483 100.0
COGS 14,807 39.5
Gross margin $22,676 60.5
Expense 17,721 47.3
EBIT $4,955 13.2
Interest $1,380 3.7
EBT $3,575 9.5
Income tax 1,430 3.8
EAT $2,145 5.7
BALANCE SHEET
ASSETS LIABILITIES & EQUITY
CASH $1,571 ACCTS. PAY. $1,388
ACCTS. REC 6,247 ACCRUALS 985
INVENTORY 2,468 CURR. LIAB. $2,373
CURR. ASSETS $10,286
FIXED ASSETS CAPITAL
GROSS $25,608 DEBT $12,390
ACCUM. DEP. (14,936) EQUITY 6,195
NET $10,672 $18,585
TOTAL ASSETS $20,958 TOTAL L & E $20,958
Management has made the following planning assumptions:
Income Statement
• Revenue will grow by 10%
• The cost ratio will improve to 37% of revenues.
• Expenses will be held to 44% of revenues.
Balance Sheet
• The year end cash balance will be $1.5 million.
• The ACP will improve to 40 days from the current 60.
• Inventory turnover will improve to 7X from 6X.
• Trade payables will continue to be paid in 45 days.
• New capital spending will be $5 million.
• Newly purchased assets will be depreciated over 10 years using the straight-line method taking a full year’s depreciation in the first year.
• The company’s payroll will be $13.7 million at the end of 20X2.
• No dividends or new stock sales are planned.
The following facts are also available:
• The firm pays 10% interest on all of its debt.
• The combined state and federal income tax rate is a flat 40%.
• The only significant payables come from inventory purchases, and product cost is 75% purchased materials.
• Existing assets will be depreciated by $1,727,000 next year.
• The only significant accrual is payroll. The last day of 20X2 will be one week after a payday.
Forecast Owl’s income statement and balance sheet for 20X2. Round all calculations to the nearest $1,000 and use a 360-day year.
Click here for the solution: The Owl Corporation is planning for 20X2
INCOME STATEMENT
$ %
Revenue $37,483 100.0
COGS 14,807 39.5
Gross margin $22,676 60.5
Expense 17,721 47.3
EBIT $4,955 13.2
Interest $1,380 3.7
EBT $3,575 9.5
Income tax 1,430 3.8
EAT $2,145 5.7
BALANCE SHEET
ASSETS LIABILITIES & EQUITY
CASH $1,571 ACCTS. PAY. $1,388
ACCTS. REC 6,247 ACCRUALS 985
INVENTORY 2,468 CURR. LIAB. $2,373
CURR. ASSETS $10,286
FIXED ASSETS CAPITAL
GROSS $25,608 DEBT $12,390
ACCUM. DEP. (14,936) EQUITY 6,195
NET $10,672 $18,585
TOTAL ASSETS $20,958 TOTAL L & E $20,958
Management has made the following planning assumptions:
Income Statement
• Revenue will grow by 10%
• The cost ratio will improve to 37% of revenues.
• Expenses will be held to 44% of revenues.
Balance Sheet
• The year end cash balance will be $1.5 million.
• The ACP will improve to 40 days from the current 60.
• Inventory turnover will improve to 7X from 6X.
• Trade payables will continue to be paid in 45 days.
• New capital spending will be $5 million.
• Newly purchased assets will be depreciated over 10 years using the straight-line method taking a full year’s depreciation in the first year.
• The company’s payroll will be $13.7 million at the end of 20X2.
• No dividends or new stock sales are planned.
The following facts are also available:
• The firm pays 10% interest on all of its debt.
• The combined state and federal income tax rate is a flat 40%.
• The only significant payables come from inventory purchases, and product cost is 75% purchased materials.
• Existing assets will be depreciated by $1,727,000 next year.
• The only significant accrual is payroll. The last day of 20X2 will be one week after a payday.
Forecast Owl’s income statement and balance sheet for 20X2. Round all calculations to the nearest $1,000 and use a 360-day year.
Click here for the solution: The Owl Corporation is planning for 20X2
Sunday, August 23, 2015
Staley Watch Company reported the following income statement data for a 2-year period
E6-12 Staley Watch Company reported the following income statement data for a 2-year period.
2008 2009
Sales $210,000 $250,000
Cost of goods sold
Beginning inventory 32,000 44,000
Cost of goods purchased 173,000 202,000
Cost of goods available for sale 205,000 246,000
Ending inventory 44,000 52,000
Cost of goods sold 161,000 194,000
Gross profit $ 49,000 $ 56,000
Staley uses a periodic inventory system. The inventories at January 1, 2008, and December 31, 2009, are correct. However, the ending inventory at December 31, 2008, was overstated $5,000.
Instructions
(a) Prepare correct income statement data for the 2 years.
(b) What is the cumulative effect of the inventory error on total gross profit for the 2 years?
(c) Explain in a letter to the president of Staley Company what has happened—i.e., the nature of the error and its effect on the financial statements.
Click here for the solution: Staley Watch Company reported the following income statement data for a 2-year period
2008 2009
Sales $210,000 $250,000
Cost of goods sold
Beginning inventory 32,000 44,000
Cost of goods purchased 173,000 202,000
Cost of goods available for sale 205,000 246,000
Ending inventory 44,000 52,000
Cost of goods sold 161,000 194,000
Gross profit $ 49,000 $ 56,000
Staley uses a periodic inventory system. The inventories at January 1, 2008, and December 31, 2009, are correct. However, the ending inventory at December 31, 2008, was overstated $5,000.
Instructions
(a) Prepare correct income statement data for the 2 years.
(b) What is the cumulative effect of the inventory error on total gross profit for the 2 years?
(c) Explain in a letter to the president of Staley Company what has happened—i.e., the nature of the error and its effect on the financial statements.
Click here for the solution: Staley Watch Company reported the following income statement data for a 2-year period
Friday, August 21, 2015
Identify the TRUE statement regarding non-recurring items on the income statement
MULTIPLE CHOICE
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
Monday, August 17, 2015
Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet
C:3-65 Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:
AND SO ON
Required for 2008:
a. Prepare page 1 of the 2008 Form 1120, computing the corporations NOL.
b. Determine the corporations deferred tax asset and deferred tax liability situation, and then complete the income statement and balance sheet to reflect proper GAAP accounting under ASC 740. Use the balance sheet information to prepare Schedule L of the 2008 Form 1120.
c. Prepare the 2008 Schedule M-3 for Form 1120.
d. Prepare a schedule that reconciles the corporations effective tax rate to the statutory 34% tax rate.
Check Figures for Project:
2008 - Form 1120, line 30 taxable income has a net operating loss of ($887,500). Schedule L has lines 15 and 28 of $16,920,750. Schedule M-2 has a line 8 balance at the end of the year of negative ($393,250). The problem does not tell you to do the M-2 but I want you try it. M-3 line 4a should be $negative ($393,250), Part II, line 26 negative ($14,950,000), line 30 negative ($852,500) and Part III, line 30 $2,047,500 in column (d).
2009 - Form 1120, line 30 taxable income of $1,836,760. Remember that you had a net operating loss in 2008 and you should have special deductions. Line 31 total tax should be $624,498. Schedule L should have a rollover beginning balance from the 2008 ending balance above and the 2009 ending balance should be $20,578,000. Schedule M-2 should have a line 8 number of $2,568,502. Schedule M-3 should have a line 4a of $2,961,752, Part II, line 26 of negative ($21,945,000), line 30 of $2,762,760, and Part III, line 36 of $3,617,240 in column (d).
Click here for the solution: Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet
AND SO ON
Required for 2008:
a. Prepare page 1 of the 2008 Form 1120, computing the corporations NOL.
b. Determine the corporations deferred tax asset and deferred tax liability situation, and then complete the income statement and balance sheet to reflect proper GAAP accounting under ASC 740. Use the balance sheet information to prepare Schedule L of the 2008 Form 1120.
c. Prepare the 2008 Schedule M-3 for Form 1120.
d. Prepare a schedule that reconciles the corporations effective tax rate to the statutory 34% tax rate.
Check Figures for Project:
2008 - Form 1120, line 30 taxable income has a net operating loss of ($887,500). Schedule L has lines 15 and 28 of $16,920,750. Schedule M-2 has a line 8 balance at the end of the year of negative ($393,250). The problem does not tell you to do the M-2 but I want you try it. M-3 line 4a should be $negative ($393,250), Part II, line 26 negative ($14,950,000), line 30 negative ($852,500) and Part III, line 30 $2,047,500 in column (d).
2009 - Form 1120, line 30 taxable income of $1,836,760. Remember that you had a net operating loss in 2008 and you should have special deductions. Line 31 total tax should be $624,498. Schedule L should have a rollover beginning balance from the 2008 ending balance above and the 2009 ending balance should be $20,578,000. Schedule M-2 should have a line 8 number of $2,568,502. Schedule M-3 should have a line 4a of $2,961,752, Part II, line 26 of negative ($21,945,000), line 30 of $2,762,760, and Part III, line 36 of $3,617,240 in column (d).
Click here for the solution: Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet
Thursday, August 13, 2015
The income statement of Rodriquez Company is shown below
E23-3 (Preparation of Operating Activities Section - Indirect Method, Periodic Inventory) The income statement of Rodriquez Company is shown below.
RODRIQUEZ COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2012
Sales $6,900,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases $4,400,000
Goods available for sale $6,300,000
Ending inventory $1,600,000
Cost of goods sold $4,700,000
Gross profit $2,200,000
Operating expenses
Selling expenses $450,000
Administrative expenses $700,000 $1,150,000
Net income $1,050,000
Additional information:
1. Accounts receivable decreased $310,000 during the year.
2. Prepaid expenses increase $170,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $275,000 during the year.
4. Accrued expenses payable decreased $120,000 during the year.
5. Administrative expenses include depreciation expense of $60,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2012, for Rodriquez Company, using the indirect method.
Click here for the solution: The income statement of Rodriquez Company is shown below
RODRIQUEZ COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2012
Sales $6,900,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases $4,400,000
Goods available for sale $6,300,000
Ending inventory $1,600,000
Cost of goods sold $4,700,000
Gross profit $2,200,000
Operating expenses
Selling expenses $450,000
Administrative expenses $700,000 $1,150,000
Net income $1,050,000
Additional information:
1. Accounts receivable decreased $310,000 during the year.
2. Prepaid expenses increase $170,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $275,000 during the year.
4. Accrued expenses payable decreased $120,000 during the year.
5. Administrative expenses include depreciation expense of $60,000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2012, for Rodriquez Company, using the indirect method.
Click here for the solution: The income statement of Rodriquez Company is shown below
Tuesday, August 4, 2015
The income statement of Mazor Company is presented here
P12-3A The income statement of Mazor Company is presented here.
MAZOR COMPANYIncome Statement
For the Year Ended November 30, 2012
Sales $7,600,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,600,000
Total cost of goods sold 4,700,000
Gross profit 2,900,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,750,000
Additional information:
1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $350,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $110,000.
Prepare the operating activities section—indirect method.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Mazor Company, using the indirect method.
Check: Cash from operations $1,940,000
Click here for the solution: The income statement of Mazor Company is presented here
MAZOR COMPANYIncome Statement
For the Year Ended November 30, 2012
Sales $7,600,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,600,000
Total cost of goods sold 4,700,000
Gross profit 2,900,000
Operating expenses
Selling expenses 450,000
Administrative expenses 700,000 1,150,000
Net income $1,750,000
Additional information:
1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $350,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Administrative expenses include depreciation expense of $110,000.
Prepare the operating activities section—indirect method.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Mazor Company, using the indirect method.
Check: Cash from operations $1,940,000
Click here for the solution: The income statement of Mazor Company is presented here
Retzlaff Company’s income statement contained the condensed information below
P12-5A Retzlaff Company’s income statement contained the condensed information below.
RETZLAFF COMPANY
Income Statement
For the Year Ended December 31, 2012
Revenues $970,000
Operating expenses, excluding depreciation $614,000
Depreciation expense 55,000
Loss on sale of equipment 16,000 685,000
Income before income taxes 285,000
Income tax expense 56,000
Net income $229,000
Retzlaff’s balance sheet contained the comparative data at December 31.
2012 2011
Accounts receivable $70,000 $60,000
Accounts payable 41,000 32,000
Income taxes payable 13,000 7,000
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
Check: Cash from operations $305,000
RETZLAFF COMPANY
Income Statement
For the Year Ended December 31, 2012
Revenues $970,000
Operating expenses, excluding depreciation $614,000
Depreciation expense 55,000
Loss on sale of equipment 16,000 685,000
Income before income taxes 285,000
Income tax expense 56,000
Net income $229,000
Retzlaff’s balance sheet contained the comparative data at December 31.
2012 2011
Accounts receivable $70,000 $60,000
Accounts payable 41,000 32,000
Income taxes payable 13,000 7,000
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
Check: Cash from operations $305,000
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