Student Name:

Class:
Problem 04-01
REED COMPANY
Comparative Income Statements
for the Years Ended December 31
2013

2012

Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Administrative
Selling
Loss from fire damage
Loss from write-down of obsolete inventory
Total operating expenses
Operating income
Other income (expense):
Interest revenue
Interest expense
Total other expenses (net)
Income from continuing operations before
income taxes and extraordinary item
Income tax expense
Income from continuing operations before
extraordinary item
Discontinued operations:
Income (loss) from operations of discontinued
component (including loss on disposal of
$50,000 in 2013)
Income tax benefit (expense)
Income (loss) on discontinued operations
Income before extraordinary item
Extraordinary item:
Loss from earthquake
(net of $40,000 tax benefit)
Net income

Earnings per share:

Income from continuing operations before
extraordinary item
Discontinued operations
Extraordinary loss
Net income

300,000 shares

Given Data P04-01:

REED COMPANY
December 31

Sales
Cost of goods sold
Administrative expenses
Selling expenses
Interest revenue
Interest expense
Loss on sale of assets of discontinued component

Results of operations for discontinued component (included above):

Sales
Cost of goods sold
Administrative expense
Selling expenses
Operating income before taxes
Additional information:
Uninsured damage due to fire
Factory damage due to earthquake
Cost of obsolete inventory
Obsolete inventory sold for scrap
Income tax rate
Common stock shares

2013
4,400,000
2,860,000
800,000
360,000
150,000
200,000
50,000

1/1/13 9/30/13
$
400,000
(290,000)
(50,000)
(20,000)
$
40,000

$
$
$
$

50,000
100,000
40,000
5,000
40%
300,000

2012
3,500,000
2,000,000
675,000
312,000
140,000
200,000
-

2012
500,000
(320,000)
(40,000)
(30,000)
110,000

Student Name:
Class:
Problem 04-05
ALEXIAN SYSTEMS, INC.
Income Statement
For the Year Ended December 31, 2013
($ in millions, except earnings per share)
Net sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling and administrative
Restructuring costs
Total operating expenses
Operating income
Other income:
Interest revenue
Gain on sale of investments
Total other income
Income before income taxes and
extraordinary item
Income tax expense
Income before extraordinary item
Extraordinary gain
Net income
Earnings per share:
Income before extraordinary item
Extraordinary item
Net income

20 shares

Given Data P04-05:

ALEXIAN SYSTEMS, INC.
Income Statement
for the Year Ended December 31, 2013
($ in millions, except earnings per share)
Revenues and gains:
Net sales
Interest
Other income
Total revenues and gains
Expenses:
Cost of goods sold
Selling and administrative
Income taxes
Total expenses
Net income
Earnings per share
Additional information ($ in millions):
Selling and administrative expenses include
restructuring costs
Other income includes extraordinary gain
Other income gain from sale of investments
Cost of goods sold increase to correct
error in 2012 ending inventory
Income tax rate
Outstanding shares of common stock

425
3
126
554

$
$

270
154
52
476
78
3.90

$
$
$

26
120
6

5
40%
20

Given Data P04-06:

REMBRANDT PAINT COMPANY
Income statement items,
year ended 12/31/2013 ($ in thousands):
Net sales
Interest income
Interest expense
Extraordinary gain
Cost of goods sold
Selling and administrative expenses
Restructuring costs
Loss from operations on plastics business
Gain on disposal of component's assets
Shares of common stock outstanding in 2013
Income tax rate

18,000
200
350
3,000
10,500
2,500
800

$
$

1,600,000
2,000,000
500,000
30%

Student Name:
Class:
Problem 04-06
REMBRANDT PAINT COMPANY
Income Statement
For the year ended December 31, 2013
($ in thousands, except per share amounts)
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling and administrative
Restructuring costs
Operating income
Interest income (expense), net
Income from continuing operations before income taxes
and extraordinary item
Income tax expense
Income from continuing operations before
extraordinary item
Discontinued operations:
Income from operations of discontinued component
Income tax expense
Income on discontinued operations
Income before extraordinary item
Extraordinary gain
Net income

18,000
10,500
$ 7,500
$

2,500
800 3,300
4,200
(150)

1,215

4,050
1,215
2,835

400
120
280
3,115
2,100
$ 5,215
Correct!

Earnings per share:

Income from continuing operations before extraordinary item
Income from discontinued operations
Extraordinary gain
Net income

500 shares
$ 5.67
0.56
4.20
$ 10.43
Correct!

Student Name:
Class:
Problem 04-06
BERNARDO PAINT COMPANY
Income Statement
For the year ended December 31, 2009
($ in thousands, except per share amounts)
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling and administrative
Restructuring costs
Operating income
Interest income (expense), net
Income from continuing operations before income taxes
and extraordinary item
Income tax expense
Income from continuing operations before
extraordinary item
Discontinued operations:
Income from operations of discontinued component
Income tax expense
Income on discontinued operations
Income before extraordinary item
Extraordinary gain
Net income
Earnings per share:
Income from continuing operations before extraordinary item
Income from discontinued operations
Extraordinary gain
Net income

22,000
13,200
$ 8,800
$

2,500
800 3,300
5,500
(150)
5,350
1,605
3,745

400
120
280
4,025
1,960
$ 5,985
700 shares
$ 5.35
$ 0.40
$ 2.80
$ 8.55

BERNARDO PAINT COMPANY

Income Statement
For the year ended December 31, 2009
($ in thousands, except per share amounts)
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling and administrative
Restructuring costs
Operating income
Interest income (expense), net
Income from continuing operations before income taxes
and extraordinary item
Income tax expense
Income from continuing operations before
extraordinary item
Discontinued operations:
Income from operations of discontinued component
Income tax expense
Income on discontinued operations
Income before extraordinary item
Extraordinary gain
Net income
Earnings per share:
Income from continuing operations before extraordinary item
Income from discontinued operations
Extraordinary gain
Net income

MPANY

er 31, 2009

22,000
13,200

$ 8,800
$

2,500
800 3,300
5,500
(150)
5,350
1,605
3,745

400
120
280
4,025
1,960
$ 5,985
700 shares
$ 5.35
$ 0.40
$ 2.80
$ 8.55

Student Name:
Class:
Problem 04-08
DUKE COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2013

Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
General and administrative
Selling
Restructuring costs
Loss from write-down of obsolete inventory
Total operating expenses
Operating income
Other income (expense):
Interest expense
Income before income taxes and extraordinary item
Income tax expense
Income before extraordinary item
Extraordinary item:
Loss from expropriation of overseas plant (net of
$1,200,000 tax benefit)
Net income
Other comprehensive income (loss):
Foreign currency translation adjustment loss, net of tax
Unrealized gain on investment securities, net of tax
Total other comprehensive loss
Comprehensive income

$ 15,000,000
9,000,000
6,000,000

1,000,000
500,000
300,000
400,000
2,200,000
3,800,000

700,000
3,100,000
1,240,000
1,860,000

(1,800,000)
60,000
(120,000)
108,000
(12,000)
$ 48,000
Correct!

1200000/.4
3

Given Data P04-08:

DUKE COMPANY
December 31, 2013 Account Balances
Sales
Cost of goods sold
General and administrative expenses
Selling expenses
Interest expense
Additional information:
Restructuring costs due to plant closings
Received for plant expropriated by foreign government
Amount received as a percentage of book value
Inventory written off as obsolete
Understatement of 2012 depreciation expense
Foreign currency translation adjustment loss
Unrealized gain on investment securities
Effective tax rate

$ 15,000,000
$ 9,000,000
$ 1,000,000
$
500,000
$
700,000

$
$
$
$
$
$

300,000
1,000,000
25%
400,000
50,000
200,000
180,000
40%