Q8E. (Income Statement, EPS) Presente... [FREE SOLUTION]

Chapter 4: Q8E. (page 184)

(Income Statement, EPS) Presented below are selected ledger accounts of Tucker Corporation as of December 31, 2017.
Cash $50,000
Administrative expenses 100,000
Selling expenses 80,000
Net sales 540,000
Cost of goods sold 210,000
Cash dividends declared (2017) 20,000
Cash dividends paid (2017) 15,000
Discontinued operations (loss before income taxes) 40,000
Depreciation expense, not recorded in 2016 30,000
Retained earnings, December 31, 2016 90,000
Effective tax rate 30%
Instructions
Compute net income for 2017.
Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 10,000 shares of common stock were outstanding during 2017.

Expert verified

a) Net income = $77,000

b) Earnings per share = $7.7

A cash dividend refers to the distribution of the accumulated profits in cash to the company's common shareholders.

Tucker Corporation
Income Statement
For the Year Ended December 31, 2017
Net Sales	$540,000
Cost of Goods Sold	210,000
Gross Profits	330,000
Less:
Administrative expenses	100,000
Selling Expenses	80,000
Income from Continuing Operations before Income tax	150,000
Income tax expense	45,000
Income from continuing operations	105,000
Less: Discontinued Operations	28,000
Net income/(Loss)	$77,000

Working Note

Particulars	Amount ($)
Discontinued Operations (Loss before income taxes)	$40,000
Less: Income tax expense	$12,000
Discontinued Operations	$28,000

Partial Income Statement
For the Year Ended December 31, 2017
Income from continuing operations before Income Tax	150,000
Income Tax Expense	45,000
Income from Continuing operations	105,000
Discontinued Operations	28,000
Net income/(Loss)	$77,000
Earnings per Share	$7.7

Working Note

$\begin{array}{rcl} Earnings per share & = & Net Income 梅 Outstanding common stock \\ = & $ 77, 000 梅 10, 000 common stock \\ = & $ 7.7 \end{array}$

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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