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STARR CO.
Single-Step Income Statement
Sales Revenue
Cost of goods sold
Salary and wage expense
Income tax expense
Increase in value of company reputation
Other operating expenses
Unrealized gain on value of patents
540,000
330,000
120,000
25,000
15,000
10,000
20,000
100,000
INSTRUCTIONS:
Prepare a single-step income statement for 2017.
STARR CO.
INCOME STATEMENT
FOR THE YEAR ENDED 12-31-2017
Revenues
Sales revenue
540,000
Expenses
Cost of Goods Sold
Salary & Wage Expense
Other Operating Expenses
Income Tax Expense
330,000
120,000
10,000
25,000
Total Expenses
485,000
Net Income
55,000
0.55
BE 4-2
BRISKY CORP.
Single-Step Income Statement
Net Sales
Interest Revenue
COGS
Administrative Expenses
Selling Expenses
Interest Expense
Tax rate
Shares authorized
Shares issued and outstanding
2,400,000
31,000
1,450,000
212,000
280,000
45,000
30%
100,000
70,000
INSTRUCTIONS:
Prepare a single-step income statement for 2017.
Brisky Corp.
Income Statement
For the Year Ended December 31, 2017
Revenues
Net Sales
Interest Revenue
Total Revenues
Expenses
Cost of goods sold
Selling expenses
Administrative expenses
Interest expense
1,450,000
212,000
280,000
45,000
133,200
Total Expenses
Net Income
Earnings per share
Calculate Income tax expense:
Revenue
Expenses
2,431,000
(1,450,000)
(212,000)
(280,000)
(45,000)
444,000
Tax rate
Income tax expense
BE 4-3
Net Sales
Interest Revenue
COGS
Administrative Expenses
Selling Expenses
Interest Expense
Tax rate
0.30
133,200
BRISKY CORP.
Condensed Multi-Step Income Stateme
2,400,000
31,000
1,450,000
212,000
280,000
45,000
30%
Shares authorized
Shares issued and outstanding
100,000
70,000
1,450,000
950,000
$
280,000
212,000
492,000
458,000
31,000
45,000
(14,000)
444,000
2,400,000
133,200
$
310,800
4.44
10,600,000
189,000
325,000
10,000,000
INSTRUCTIONS:
PREPARE PARTIAL INCOME STATEMENT
FINLEY CORPORATION
Income Statement (partial)
For the Year Ended December 31, 2017
Income from continuing operations
Discontinued Operations
Loss from operations of discontinued
restaurant division, net of tax
10,600,000
325,000
189,000
(514,000)
Net Income
$10,086,000
CALCULATION OF EPS
Income from continuing operations
Loss from discontinued operations
Net Income
1.06
($0.05)
$1.01
# of shares
10,600,000
(504,000)
10,096,000
10,000,000
10,000,000
STACY CORP.
7,200,000
770,000
17,000
53,000
30%
5,000,000
INSTRUCTIONS:
Prepare a partial income statement starting with income from continuing operations.
STACY CORPORATION
Income Statement (partial)
For the Year Ended December 31, 2017
Income from Continuing Operations
Other Revenues and Gains
Interest Revenue
7,200,000
17,000
7,217,000
770,000
53,000
823,000
6,394,000
$1,918,200
$
4,475,800
0.90
WILLIAMSON COMPANY
CHANGE FROM FIFO TO WEIGHTED AV
During 2017, the company changed from FIFO to weighted average inventory pricing.
Pretax income in 2016 and 2015 (first year of operations) under FIFO:
2017
FIFO INCOME
2016
180,000
180,000
145,000
Vandross Company has recorded bad debt expense in the past at the rate of 1 1/2% of accounts
receivable, based on an aging analysis. Vandross decides to increase its estimate to 2%.
If the new rate had been used in previous years, cumulative bad debt expense would have been
$380,000 instead of $285,000.
In 2017, bad debt expense will be $120,000 instead of %90,000.
If Vandross's tax rate is 30%, what amount should it report as the cumulative effect of changing
the estimated bad debt rate?
ZERO
CHANGES IN ESTIMATES ARE NOT HANDLED RETROSPECTIVELY.
BRIEF EXERCISE 4-8
COMPUTE EPS
1,000,000
250,000
190,000
190,000
675,000
1,400,000
75,000
675,000
1,400,000
(75,000)
2,000,000
Using the information from BE4-9, prepare a retained earnings statement for the year ended
December 31, 2017. Assume an error was discovered: land costing $80,000 (net of tax) was
charged to maintenance and repairs expense in 2014.
Portman Corporation
Statement of Retained Earnings
For the year ended December 31, 2017
Retained earnings, January 1, as reported
Correction for overstatement of expenses in prior
period (net of tax)
Retained earnings, January 1, as adjusted
675,000
80,000
755,000
1,400,000
(75,000)
2,080,000
COMPREHENSIVE INCOME
60,000
60,000
At that date, the company has no other asset, liability or equity balances.
On January 2, it purchased for cash debt securities that it classified as available-for-sale
20,000
Interest received on these securities during the year
3,000
4,000
A
B
C
3,000
Comprehensive income
Net income
3,000
4,000
7,000
4,000
4,000
2,400,000
31,000
2,431,000
2,120,200
$
310,800
4.44
ome Statement
shares
1.06
(0.05)
1.01
WEIGHTED AVERAGE
2015
160,000
170,000
ESTIMATES
of accounts
have been
f changing
TATEMENT
ED EARNINGS
MENT
r ended
ax) was
3.95