Presented below are certain account balances of paczki products co.

HW 1

(Computation of Net Income)

Presented below are changes in all the account balances of Jackson Furniture Co. during the current year, except for retained earnings.

Increase (Decrease)

Increase (Decrease)

Cash

$83,310

Accounts Payable

$(59,290)

Accounts Receivable (net)

46,620

Bonds Payable

84,140

Inventory

133,170

Common Stock

125,350

Investments

(49,380)

Additional Paid-in Capital

15,800

Compute the net income for the current year, assuming that there were no entries in the Retained Earnings account except for net income and a dividend declaration of $24,640 which was paid in the current year.

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(Income Statement Items)

Presented below are certain account balances of Paczki Products Co.

Rental revenue

$6,810

Sales discounts

$7,980

Interest expense

12,910

Selling expenses

99,890

Beginning retained earnings

114,500

Sales

390,550

Ending retained earnings

134,230

Income tax

31,800

Dividend revenue

72,590

Cost of goods sold

185,470

Sales returns

12,550

Administrative expenses

82,980

From the foregoing, compute the following in a periodic inventory environment: (a) total net revenue, (b) net income, (c) dividends declared during the current year.

(a)

Total net revenue

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(b)

Net income

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(c)

Dividends declared

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(Multiple-step and Extraordinary Items)

The following balances were taken from the books of Parnevik Corp. on December 31, 2012.

Interest revenue

$92,800

Accumulated depreciation-building

28,000

Cash

51,000

Notes receivable

155,000

Sales

1,341,100

Selling expenses

201,400

Accounts receivable

150,000

Accounts payable

170,000

Prepaid insurance

20,000

Bonds payable

100,000

Sales returns and allowances

156,000

Administrative and general expenses

97,300

Allowance for doubtful accounts

7,000

Accrued liabilities

32,000

Sales discounts

52,500

Interest expense

73,100

Land

100,000

Notes payable

100,000

Equipment

200,000

Loss from earthquake damage

Building

140,000

(extraordinary item)

130,000

Cost of goods sold

629,400

Common stock

500,000

Accumulated depreciation-equipment

40,000

Retained earnings

21,000

Assume the total effective tax rate on all items is 34%.

Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year. (Round per share of common stock to 2 decimal places, e.g. 0.25 and all other answers to zero decimal places, e.g. 2,250. For per share of common stock use either a negative sign preceding the number, e.g. -0.45 or parenthesis e.g. (0.45) for negative numbers. Enter all other amounts as positive amounts and subtract where necessary. For multiple entries list from largest to smallest amounts, e.g. 10, 5, 1.)

PARNEVIK CORP.

Income Statement

For the Year Ended December 31, 2012

Sales Revenue

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Less: http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

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Net sales revenue

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Gross profit

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Operating Expenses

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Income from operations

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Other Revenues and Gains

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Other Expenses and Losses

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Income before taxes and extraordinary item

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Income before extraordinary item

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Extraordinary item

Loss from earthquake damage

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Less applicable tax reduction

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Net income

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Per share common stock:

Income before extraordinary item

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Extraordinary item

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Net income

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(Retained Earnings Statement)

McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.

Net income

Dividends declared

2009

$48,500

$ -0-

2010

129,700

58,200

2011

160,100

54,600

The following information relates to 2012.

Income before income tax

$245,000

Prior period adjustment: understatement of 2010 depreciation expense (before taxes)

$26,100

Cumulative decrease in income from change in inventory methods (before taxes)

$41,400

Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2013)

$100,000

Effective tax rate

40%

(a)

Prepare a 2012 retained earnings statement for McEntire Corporation. (Enter all amounts as positive amounts and subtract where necessary.)

McENTIRE CORPORATION

Retained Earnings Statement

For the Year Ended December 31, 2012

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Correction for depreciation error (net of taxes)

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Balance, January 1, as adjusted

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Add: http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

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Deduct: http://edugen.wileyplus.com/edugen/art2/common/pixel.gif

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Balance, December 31

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(b)

Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet?

Total retained earnings

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(Earnings per Share)

At December 31, 2011, Schroeder Corporation had the following stock outstanding.

8% cumulative preferred stock, $100 par, 108,172 shares

$10,817,200

Common stock, $5 par, 4,031,160 shares

20,155,800

During 2012, Schroeder's did not issue any additional stock. The following also occurred during 2012.

Income from continuing operations before taxes

$31,109,600

Discontinued operations (loss before taxes)

3,277,800

Preferred dividends declared

865,376

Common dividends declared

2,284,000

Effective tax rate

35%

Compute earnings per share data as it should appear in the 2012 income statement of Schroeder Corporation. (Round answers to 2 decimal place, e.g. 5.25. For negative numbers use either a negative sign preceding the number, e.g. -0.45 or parenthesis, e.g. (0.45).)

Earnings per share

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Net income

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(Comprehensive Income)

Armstrong Corporation reported the following for 2012: net sales $1,216,800; cost of goods sold $769,100; selling and administrative expenses $348,900; and an unrealized holding gain on available-for-sale securities $20,300.

Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)

ARMSTRONG CORPORATION

Income Statement and Statement of Comprehensive Income

For the Year Ended December 31, 2012

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Gross Profit

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Net income

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Net income

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Unrealized holding gain

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Comprehensive income

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