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Chapter 2: 7BP (page 48)
Given the following information, prepare an income statement for Jonas Brothers Cough Drops.
Selling and administrative expenses | $328,000 |
Depreciation expenses | 195,000 |
Sales | 1,660,000 |
Interest expenses | 129,000 |
Cost of goods sold | 560,000 |
Taxes | 171,000 |
The net income after tax arrives at $277,000.
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The Sterling Tire Company鈥檚 income statement for 20X1 is as follows:
STERLINE TIRE COMPANY Income Statement For the year ended December 31, 20X1 | |
Sales (20,000 tires at \(60 each) | \)1,200,000 |
Less: variable costs (20,000 tires at \(30) | 600,000 |
Less: fixed cost | 400,000 |
Earnings before interest and taxes (EBIT) | \)200,000 |
Interest expenses | 50,000 |
Earning before taxes (EBT) | \(150,000 |
Income tax expenses (30%) | 45,000 |
Earning after taxe (EAT) | \)105,000 |
Given this income statement, compute the following:
d. Break even point in units.
Sosa Diet Supplements had earnings after taxes of $800,000 in 20X1 with 200,000 shares of stock outstanding. On January 1, 20X2, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 30 percent.
a. Compute earnings per share for the year 20X1.
b. Compute earnings per share for the year 20X2.
Convex Mechanical Supplies produces a product with the following costs as of July 1, 20X1:
Material | \(6 |
Labor | 4 |
Overhead | 2 |
\)12 |
Beginning inventory at these costs on July 1 was 5,000 units. From July 1 to December 1, Convex produced 15,000 units. These units had a material cost of \(10 per unit. The costs for labor and overhead were the same. Convex uses FIFO inventory accounting.
Assuming that Convex sold 17,000 units during the last six months of
the year at \)20 each, what would gross profit be? What is the value of ending
inventory?
What conditions would help make a percent-of-sales forecast almost as accurate as pro forma financial statements and cash budgets?
Prepare an income statement for Franklin Kite Co. Take your calculations all the way to computing earnings per share.
Sales | $900,000 |
Shares outstanding | 50,000 |
Cost of goods sold | 400,000 |
Interest expenses | 40,000 |
Selling and administration expenses | 60,000 |
Depreciation expenses | 20,000 |
Preferred stock dividend | 80,000 |
Taxes | 50,000 |
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