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Chapter 4: Q4-1ISTQ (page 198)
Which of the following is not reported in an income statement under IFRS?
(a) Discontinued operations.
(b) Extraordinary items.
(c) Cost of goods sold.
(d) Income tax.
Option b is the correct answer.
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The following are selected ledger accounts of Spock Corporation on December 31, 2017.
Cash \( 185,000 Salaries and wages expense (sales) \)284,000
Inventory 535,000 Salaries and wages expense (office) 346,000
Sales revenue 4,275,000 Purchase returns 15,000
Unearned sales revenue 117,000 Sales returns and allowances 79,000
Purchases 2,786,000 Freight-in 72,000
Sales discounts 34,000 Accounts receivable 142,500
Purchase discounts 27,000 Sales commissions 83,000
Selling expenses 69,000 Telephone and Internet expense (sales) 17,000
Accounting and legal services 33,000 Utilities expense (office) 32,000
Insurance expense (office) 24,000 Miscellaneous office expenses 8,000
Advertising expense 54,000 Rent revenue 240,000
Delivery expense 93,000 Casualty loss (before tax) 70,000
Depreciation expense (office equipment) 48,000 Depreciation expense (sales equipment) 36,000
Common stock (\(10 par) 900,000 Interest expense 176,000
Spock鈥檚 effective tax rate on all items is 34%. A physical inventory indicates that the ending inventory is \)686,000.
Instructions
Prepare a condensed 2017 income statement for Spock Corporation.
Question: (Earnings per Share) The stockholders鈥� equity section of Hendly Corporation appears below as of December 31, 2017.
8% preferred stock, \(50 par value, authorized
100,000 shares, outstanding 90,000 shares \)4,500,000
Common stock, \(1.00 par, authorized and issued 10 million shares 10,000,000
Additional paid-in capital 20,500,000
Retained earnings \)134,000,000
Net income 33,000,000167,000,000
\(202,000,000
Net income for 2017 reflects a total effective tax rate of 34%. Included in the net income figure is a loss of \)18,000,000 (before tax) as a result of a non-recurring major casualty. Preferred stock dividends of \(360,000 were declared and paid in 2017. Dividends of \)1,000,000 were declared and paid to common stockholders in 2017.
Instructions
Compute earnings per share data as it should appear on the income statement of Hendly Corporation.
You run into Greg Norman at a party and begin discussing financial statements. Greg says, 鈥淚 prefer the single step income statement because the multiple-step format generally overstates income.鈥� How should you respond to Greg?
Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:
Cost of goods sold \)330,000
Salaries and wages expense 120,000
Income tax expense 25,000
Increase in value of company reputation 15,000
Other operating expenses 10,000
Unrealized gain on value of patents 20,000
Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.
(Single-Step Statement, Retained Earnings Statement, Periodic Inventory) Presented below is the trial balance of Thompson Corporation on December 31, 2017.
| THOMPSON CORPORATION | ||
| TRIAL BALANCE | ||
| DECEMBER 31, 2017 | ||
Debit (\() | Credit (\)) | |
Purchase Discounts | \(10,000 | |
Cash | \)189,700 | |
Accounts receivables | 105,000 | |
Rent Revenue | 18,000 | |
Retained Earnings | 160,000 | |
Salaries and Wages payable | 18,000 | |
Sales Revenue | 1,100,000 | |
Notes Receivables | 110,000 | |
Accounts payable | 49,000 | |
Accumulated Depreciation | 28,000 | |
Sales discount | 14,500 | |
Sales return and allowances | 17,500 | |
Notes payable | 70,000 | |
Selling expenses | 232,000 | |
Administrative expenses | 99,000 | |
Common Stock | 300,000 | |
Income tax expenses | 53,900 | |
Cash Dividends | 45,000 | |
Allowance for Doubtful Accounts | 5,000 | |
Supplies | 14,000 | |
Freight-In | 20,000 | |
Land | 70,000 | |
Equipment | 140,000 | |
Bonds Payable | 100,000 | |
Gain on Sale of Land | 30,000 | |
Accumulated Depreciation | 19,600 | |
Inventory | 89,000 | |
Buildings | 98,000 | |
Purchases | 610,000 | |
Totals | \(1,907,600 | \)1,907,600 |
A physical count of inventory on December 31 resulted in an inventory amount of \(64,000; thus, cost of goods sold for 2017 is \)645,000.
Instructions
Prepare a single-step income statement and a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. Thirty thousand shares of common stock were outstanding the entire year.
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