Week 4 Learning Team Assignment

Due: Monday, June 23, 2014

239414200.xlsx.ms_office
Instructions
Gucci Inc. reported income from continuing operations before taxes during 2012 of $796640. Additional
transactions occurring in 2012 but not considered in the $796640 are as follows.
6. The corporation decided to change its method of inventory pricing from average cost to the FIFO
method. The effect of this change on prior years is to increase 2010 income by $62000 and decrease
2011 income by $20700 before taxes. The FIFO method has been used for 2012. The tax rate on these
items is 40%.
Prepare an income statement for the year 2012 starting with income from continuing operations before
taxes. Compute earnings per share as it should be shown on the face of the income statement.
Common shares outstanding for the year are 121200 shares. (Assume a tax rate of 30% on all items,
unless indicated otherwise.)
5. The corporation disposed of its recreational division at a loss of $116100 before taxes. Assume that
this transaction meets the criteria for discontinued operations.
4. When its president died, the corporation realized $152000 from an insurance policy. The cash
surrender value of this policy had been carried on the books as an investment in the amount of $45960
(the gain is nontaxable).
3. Sale of securities held as a part of its portfolio resulted in a loss of $58120 (pretax).
2. At the beginning of 2010, the corporation purchased a machine for $55540 (salvage value of $8890)
that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2010, 2011, and
2012 but failed to deduct the salvage value in computing the depreciation base.
1. The corporation experienced an uninsured flood loss (extraordinary) in the amount of $86850 during
the year. The tax rate on this item is 46%.
Income Statement
239414200.xlsx.ms_office
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 Computation of income from cont. operations before taxes: 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 Computation of income tax: 31
32 32
33 33
34 34
35 35
36 36
37 37
38 38
39 39
40 40
GUCCI INC.
Income Statement (Partial)
For the Year Ended December 31, 2012
Income Statement
239414200.xlsx.ms_office
Debits Credits
41,320 $
164,958
8,467 $
5,643
210,450
332,230
83,540
125,000
38,400
401,000
243,250
19,940
146,546
48,350
92,540
199,400
495,000
44,550
144,378
1,422,481 $ 1,422,481 $
Additional information:
1. The LIFO method of inventory value is used
Instructions
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1,
2023.
8. 595000 shares of common stock of a par value of $1 were authorized, of which 495000 shares
were issued and outstanding.
Prepare a balance sheet as of December 31, 2012, so that all important information is fully
disclosed.
December 31, 2012
Adjusted Trial Balance
6. The notes payable represent bank loans that are secured by long-term investments carried at
$121000. These bank loans are due in 2013.
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Prepaid Insurance
Inventory
2. The cost and fair value of the long-term investments that consist of stocks and bonds is the
same.
3. The amount of the Construction in Process account represents the costs expended to date on
a building in the process of construction. (The company rents factory space at the present time.)
The land on which the building is being constructed cost $83540, as shown in the trial balance.
4. The patents were purchased by the company at a cost of $42667 and are being amortized on a
straight-line basis.
5. Of the discount on bonds payable, $1994 will be amortized in 2013.
Equity Investments (long-term)
Land
Construction in Process (building)
Accrued Expenses
Accounts Payable
Notes Payable
Patents
Equipment
Accumulated Depreciation - Equipment
Discount on Bonds Payable
Bonds Payable
Common Stock
Paid in Capital in Excess of Par - Common Stock
Retained Earnings
The adjusted trial balance of Matthew Company and other related information for the year 2012 are
presented below.
MATTHEW COMPANY
Balance Sheet
239414200.xlsx.ms_office
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 31
32 32
33 33
34 34
35 35
36 36
37 37
38 38
39 39
40 40
41 41
42 42
43 43
44 44
45 45
46 46
47 47
48 48
49 49
50 50
51 51
Liabilities and Stockholders' Equity
MATTHEW COMPANY
Balance Sheet
December 31, 2012
Assets
Balance Sheet
239414200.xlsx.ms_office
2012 2011
28,820 $ 21,310 $
74,890 57,740
220,020 252,520
8,996 7,006
332,726 338,576
598,430 501,650
152,200 124,780
446,230 376,870
778,956 $ 715,446 $
123,900 $ 116,000 $
46,640 71,650
27,120 25,990
197,660 213,640
70,300 101,650
267,960 315,290
370,000 280,000
140,996 120,156
510,996 400,156
778,956 $ 715,446 $
Sales 1,268,450 $
Cost of goods sold 715,460
Gross profit 552,990
Expenses
Salaries and wages expense 251,460
Interest expense 71,450
Depreciation expense 27,420
Other expenses 8,824
Total expenses 359,154
Operating income 193,836
Income tax expense 48,500
Net income 145,336 $
The following is additional information concerning Rucker's transactions during the year ended May 31, 2012.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, compromising the total accounts payable account.
3. Plant assets costing $96780 were purchase by paying $26680 in cash and issuing 7010 shares of stock.
4. The "other expenses" are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Rucker issued 1990 shares of common stock at par value.
7. Cash dividends of $124496 were declared and paid at the end of the fiscal year.
Instructions
12
13
14
RUCKER COMPANY
Comparative Balance Sheet
As of May 31
For the Year Ended May 31, 2012
Current Assets
Cash
Accounts receivable
Inventory
Prepaid expenses
Plants assets
Less accumulated
Accounts payable
Income Statement
RUCKER COMPANY
a) Prepare a statement of cash flows for Rucker Company for the year ended May 31, 2012, using the direct method of
presentation. Be sure to support the statements with the appropriate calculations. (A reconciliation of net income to net cash is
not required).
Net plant assets
Total current liabilities
Rucker Company operates several stores and is a publicly traded company. The comparative balance sheet and income
statement for Rucker as of May 31, 2012, are shown below. The company is preparing its statement of cash flows.
Plant assets
Total assets
Current Liabilities
Total current assets
depreciation - plant assets
Salaries and wages payable
Interest payable
Bonds payable
Total liabilities
b) Using the indirect method, calculate only the net cash flow from operating activities for Rucker Company for the year ended
May 31, 2012.
Total stockholders' equity
Total liabilities and stockholders' equity
Long-term debt
Stockholders' equity
Common stock, $10 par
Retained earnings
Statement of Cash Flows
239414200.xlsx.ms_office
(a) Direct Method - COMPLETE STAEMENT
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
(a) (Continued)
Computations:
(b) Indirect Method - PARTIAL STATEMENT
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
For the Year Ended May 31, 2012
RUCKER COMPANY
Statement of Cash Flows
For the Year Ended May 31, 2012
RUCKER COMPANY
Partial Statement of Cash Flows
Statement of Cash Flows
Overall Grade
Earned Possible
Income Statement 0.00 45
Balance Sheet 0.00 40
Statement of Cash Flows 0.00 50
0.00 135