Beruflich Dokumente
Kultur Dokumente
$1,233,000
Expenses
Cost of goods sold................................................................
500,000
Selling expenses....................................................................
400,000(c)
Administrative expenses.......................................................
100,000(a)
Interest expense.....................................................................
20,000
Total expenses.............................................................
1,020,000
213,000
Income tax..............................................................................
63,900
Net income
$ 149,100
*Rounded
7.46*
Administrative expenses
(b)
Gross sales X 8%
= administrative expenses
= $100,000 8%
= $1,250,000
(c)
Selling expenses
EXERCISE 4-4
(a)
Multiple-Step Form
P. Bride Company
Income Statement
For the Year Ended December 31, 2007
(In thousands, except earnings per share)
Sales
$96,500
60,570
35,930
Operating Expenses
Selling expenses
Sales commissions..............................................
$7,980
6,480
Transportation-out................................................
2,690
$17,150
Administrative expenses
Officers salaries...................................................
4,900
3,960
8,860
26,010
9,920
17,230
27,150
1,860
25,290
Income tax...................................................................
9,070
Net income.........................................................................
$16,220
$.40
Single-Step Form
P. Bride Company
Income Statement
For the Year Ended December 31, 2007
(In thousands, except earnings per share)
Revenues
Net sales...............................................................................................
$ 96,500
Rental revenue.....................................................................................
17,230
Total revenues...............................................................................
113,730
Expenses
Cost of goods sold..............................................................................
60,570
Selling expenses.................................................................................
17,150
Administrative expenses....................................................................
8,860
Interest expense..................................................................................
1,860
Total expenses...............................................................................
88,440
25,290
Income tax..................................................................................................
9,070
Net income...........................................................................................
$ 16,220
$.40
Single-step:
1.
Simplicity and conciseness.
2.
Probably better understood by users.
3.
Emphasis on total costs and expenses and net income.
4.
Does not imply priority of one revenue or expense over
another.
Multiple-step:
1.
Provides more information through segregation of operating
and nonoperating items.
2.
Expenses are matched with related revenue.
PROBLEM 4-1
American Horse Company
Income Statement
For the Year Ended December 31, 2007
Sales...........................................................................................
$25,000,000
17,000,000
Gross profit................................................................................
8,000,000
4,700,000
3,300,000
$ 70,000
110,000
180,000
820,000
2,660,000
Income tax.................................................................................
905,000
1,755,000
Discontinued operations
Loss on operations, net of tax....................................
90,000
440,000
530,000
1,225,000
390,000
$
835,000
$ 5.62a
Discontinued operations
Loss on operations, net of tax..................................
$( .30)
(1.47)
(1.77)
3.85b
(1.30)
Net income.............................................................................
$ 2.55c
980,000
835,000
1,815,000
Less: Dividends
Preferred stock...........................................................
$ 70,000
Common stock............................................................
250,000
$1,755,000 $70,000
300,000 shares
$1,225,000 $70,000
300,000 shares
$835,000 $70,000
300,000 shares
= $5.62
= $3.85
= $2.55
320,000
$ 1,495,000
EXERCISE 5-1
(b) If the company accounts for the treasury stock on the cost basis, the
account should properly be shown as a reduction of total stockholders
equity.
EXERCISE 5-13
(a)
4.
(f)
1.
(k)
1.
(b)
3.
(g)
5.
(l)
2.
(c)
4.
(h)
4.
(m)
2.
(d)
3.
(i)
5.
(e)
1.
(j)
4.
EXERCISE 5-17
(a)
$55,000
1,500
56,500
(33,000)
9,000
$32,500a
Assets
Current assets...............................................................
Long-term investments................................................
Property, plant, and equipment
Land.........................................................................
Building ($120,000 + $27,000)................................
Less: Accum. depreciation
($30,000 + $4,000)................................................
Equipment ($90,000 $20,000)..............................
Less: Accum. depreciation
($11,000 $8,000 + $9,000).................................
Total property, plant, and equipment...................
Intangible assetspatents
($40,000 $2,500)................................................
Total assets......................................................
$296,500b
16,000
$147,000
$ 30,000
(34,000)
70,000
113,000
(12,000)
58,000
201,000
37,500
$551,000
$163,000
150,000
313,000
$180,000
69,000
249,000
(11,000)
238,000
$551,000
The amount determined for current assets could be computed last and then is a
plug figure. That is, total liabilities and stockholders equity is computed because
information is available to determine this amount. Because the total assets amount is
the same as total liabilities and stockholders equity amount, the amount of total
assets is determined. Information is available to compute all the asset amounts except
current assets and therefore current assets can be determined by deducting the total
of all the other asset balances from the total asset balance (i.e., $551,000 $37,500
$201,000 $16,000). Another way to compute this amount, given the information, is
that beginning current assets plus the $29,000 increase in current assets other than
cash plus the $32,500 increase in cash equals $296,500.