The following data were taken from the records of Surf s

The following data were taken from the records of Surf’s Up Corporation for the year ended
July31, 2006:Retained earnings and balance sheet data:Accounts payable ...........................$
9,500Accounts receivable .........................276,050Accumulated depreciation
........................3,050,000Accumulated other comprehensive income
..................15,000Allowance for doubtful accounts .....................11,500Cash
...............................115,500Common stock, $10 par (500,000 shares authorized; 251,000
shares issued) ..2,510,000Deferred income taxes payable (current portion, $4,700)
...........65,700Dividends:Cash dividends for common stock ......................80,000Cash dividends
for preferred stock ...................100,000Stock dividends for common stock
.....................40,000Dividends payable ..........................25,000Employee termination benefit
obligation (current) ...............90,000Equipment ............................11,819,050Income tax payable
............................55,900Interest receivable .............................2,500Merchandise inventory (July
31, 2006), at lower of cost (FIFO) or market .....551,500Paid-in capital from sale of Treasury
stock .................$ 5,000Paid-in capital in excess of par—common stock ..............996,300Paid-in
capital in excess of par—preferred stock ................240,000Patents
.................................85,000Preferred 62–3% stock, $100 par (30,000 shares authorized; 15,000
shares issued).1,500,000Prepaid expenses ...........................15,900Retained earnings, August
1, 2005 .....................4,231,600Temporary investments in marketable equity securities (at cost)
..........95,000Treasury stock (1,000 shares of common stock at cost of $40 per share)
.......40,000Unrealized gain (net of tax) on marketable equity securities ...........15,000Income
statement data:Administrative expenses ........................$ 140,000Cost of merchandise sold
.......................984,000Gain on condemnation of land ......................30,000Income
tax:Applicable to continuing operations .....................170,000Applicable to loss from
discontinued operations ................24,000Applicable to gain on condemnation of land
................10,000Interest expense .............................7,500Interest revenue
.............................1,500Loss from disposal of discontinued operations ................104,000Loss
from fixed asset impairment .....................60,000Restructuring charge
.........................300,000Sales . ..............................2,600,000Selling expenses
.............................540,000Instructions1. Prepare a multiple-step income statement for the year
ended July 31, 2006, concluding with earnings per share. In computing earnings per share,
assume that the average number of common shares outstanding was 250,000 and preferred
dividends were $100,000. Assume that the gain on the condemnation of land is an extraordinary
item.2. Prepare a retained earnings statement for the year ended July 31, 2006.3. Prepare a
balance sheet in report form as of July 31, 2006.View Solution:
The following data were taken from the records of Surf s
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