Scot Fraser May 23, 2012 Homework Chapter 4

E4)

Admin. Ex. = 500,000 * .18 = $90,000 Cost of Goods Sold = $500, 000 Gross Sales = Admin. Ex. / .08 = 90,000/.08 = 1,125,000 Net Sales = Gross Sales Sales Discount = 1,125,000 17,000 = 1,108,000 Operating Expense = Admin. Ex. / (1/5) = 90,000/(1/5) = 450,000 Income Statement Net Sales Cost of Goods Sold Gross Sales Operating Expenses: Admin. Ex. Selling Ex. (450,000 90,000) Total Operating Expense Income From Operations Non-Operating Expenses: Interest Expense Income before Taxes Income tax Expense (138,000 * .30) Net Income $1,108,000 (500,000) $608,000 90,000 360,000 450,000

(450,00) $158,000 (20,000) $138,000 (41,400) $96,600

E5) WEBSTER COMPANY Income Statement For the Year Ended December 31, 2010 Sales Cost of goods sold Gross profit Operating Expenses Selling expenses Sales commissions Depr. of sales equipment Transportation-out Administrative expenses Officers salaries Depr. of office furn. and equip. Income from operations $96,500 63,570 32,930

$7,980 6,480 2,690 4,900 3,960

$17,150

8,860

26,010 6,920

Other Revenues and Gains Rental revenue Other Expenses and Losses Interest expense Income before income tax Income tax Net income Earnings per share ($14,710 40,550)

17,230 24,150 1,860 22,290 7,580 $14,710 $.36

E7) Net sales Cost of goods sold Gross profit Operating Expenses Selling expenses Administrative expenses Total Operating Expense Income from operations Other Revenues and Gains Rent revenue Other Expenses and Losses Interest expense Loss on Sale of Plant Assets Income before income tax Income tax Net income Other Comprehensive Income Unrealized Gain, Net of tax Comprehensive Income Earnings per share from Net Income ($108,400 20,000) Earnings per share of Unrealized gain (31,000/20,000) Earnings Per share of Comprehensive Income $980,000 516,000 464,000

140,000 181,000 (321,000) 143,000

29,000 172,000 18,000 15,000

33,000 139,000 30,600 108,400

31,000

31,000 139,400 $5.42 $1.55 $6.97

BROKAW CORP. Income Statement

For the Year Ended December 31, 2010 Sales Revenue Net sales Cost of goods sold Gross profit Operating Expenses Selling expenses Administrative expenses Income from operations Other Revenues and Gains Dividend revenue Interest revenue Other Expenses and Losses Write-off of inventory due to obsolescence Income before income tax and extraordinary item Income tax Income before extraordinary item Extraordinary item Casualty loss Less: Applicable tax reduction Net income Per share of common stock: Income before extraordinary item ($167,640 60,000) Extraordinary item, net of tax Net income ($134,640 60,000) $1,200,000 780,000 420,000

$65,000 48,000

113,000 307,000

20,000 7,000

27,000 334,000

80,000 254,000 86,360 167,640 50,000 17,000

33,000 $ 134,640

$2.79* (0.55) $2.24

BROKAW CORP. Retained Earnings Statement For the Year Ended December 31, 2010 Retained earnings, Jan. 1, as reported Correction for overstatement of net income in prior period (depreciation error) (net of $13,600 tax) Retained earnings, Jan. 1, as adjusted Add: Net income Less: Dividends declared Retained earnings, Dec. 31

$ 980,000 (26,400) 953,600 134,640 1,088,240 45,000 $1,043,240

E16) BRYANT CO. Statement of Stockholders Equity For the Year Ended December 31, 2010 Comprehensive Income Accumulated Other Comprehensive Income $80,000

Beginning balance Comprehensive income Net income* Other comprehensive income Unrealized holding loss Comprehensive income Dividends Ending balance

Total $520,000 170,000 (50,000) (10,000) $630,000

Retained Earnings $ 90,000 170,000

Common Stock $350,000

$170,000 (50,000) $120,000

(50,000) (10,000) $250,000

$30,000

$350,000

Net income = Sales Rev. Cost of Goods Sold Operating Expenses Net income = 750,000 500,000 80,000 = 170,000 P5) Income Statement For the Year Ended June 30, 2012 Sales Revenue Sales revenue Less: Sales discounts Sales returns and allowances Net sales Cost of goods sold Gross profit Operating Expenses Selling expenses

$1,578,500 $31,150 62,300 93,450 1,485,050 896,770 588,280

Sales commissions Salaries and wages exp. Travel expense Freight-out Entertainment expense Telephone and Internet expense Maintenance and repairs expense Depreciation expense Bad debt expense Misc. selling expenses Administrative Expenses Maintenance and repairs expense Property tax expense Depreciation expense Supplies expense Telephone and internet expense Miscellaneous office expenses Income from operations Other Revenues and Gains Dividend revenue Other Expenses and Losses Interest expense Income before income tax Income tax Net income Earnings per common share [($221,525 $9,000) 80,000]

$97,600 56,260 28,930 21,400 14,820 9,030 6,200 4,980 4,850 4,715

248,785

9,130 7,320 7,250 3,450 2,820 6,000

35,970 303,525 38,000

18,000 323,525 102,000 $221,525 $2.66*

TWAIN CORPORATION Retained Earnings Statement For the Year Ended June 30, 2012 Retained earnings, July 1, 2011, as reported Correction of depreciation understatement, net of tax Retained earnings, July 1, 2011, as adjusted Add: Net income Less: Dividends declared on preferred stock Dividends declared on common stock Retained earnings, June 30, 2012 9,000 37,000

$337,000 (17,700) 319,300 221,525 540,825

46,000 $494,825