Brisky Corporation had net sales of $2.4 million in 2010 with interest revenue of $31,000 and expenses totaling $1.987 million. The tax rate was 30% and there were 70,000 shares outstanding. [END SUMMARY]
Brisky Corporation had net sales of $2.4 million in 2010 with interest revenue of $31,000 and expenses totaling $1.987 million. The tax rate was 30% and there were 70,000 shares outstanding. [END SUMMARY]
Brisky Corporation had net sales of $2.4 million in 2010 with interest revenue of $31,000 and expenses totaling $1.987 million. The tax rate was 30% and there were 70,000 shares outstanding. [END SUMMARY]
Brisky Corporation had net sales of $2.4 million in 2010 with interest revenue of $31,000 and expenses totaling $1.987 million. The tax rate was 30% and there were 70,000 shares outstanding. [END SUMMARY]
BE4-2 Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2010. Expenses for 2010 were: cost of goods sold $1,450,000; administrative expenses $212,000; selling expenses $280,000; interest expense $45,000. Brisky’s tax rate is 30%. The corporation had 100,000 shares of common stock authorized and 70,000 shares issued and outstanding during 2010. Prepare a single-step income statement for the year ended December 31, 2010.
BE4-4 Finley Corporation had income from continuing operations of $10,600,000 in 2010. During 2010, it disposed of its restaurant division at an after-tax loss of $189,000. Prior to disposal, the division operated at a loss of $315,000 (net of tax) in 2010. Finley had 10,000,000 shares of common stock outstanding during 2010. Prepare a partial income statement for Finley beginning with income from continuing operations.
BE4-6 During 2010 Williamson Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2009 and 2008 (Williamson’s first year of operations) under FIFO was $160,000 and $180,000, respectively. Pretax income using weighted-average pricing in the prior years would have been $145,000 in 2009 and $170,000 in 2008. In 2010, Williamson Company reported pretax income (using weighted-average pricing) of $180,000. Show comparative income statements for Williamson Company, beginning with “Income before income tax,” as presented on the 2010 income statement. (The tax rate in all years is 30%.)
BE4-8 In 2010, Hollis Corporation reported net income of $1,000,000. It declared and paid preferred stock dividends of $250,000. During 2010, Hollis had a weighted average of 190,000 common shares outstanding. Compute Hollis’s 2010 earnings per share.
BE4-9 Portman Corporation has retained earnings of $675,000 at January 1, 2010. Net income during 2010 was $1,400,000, and cash dividends declared and paid during 2010 totaled $75,000. Prepare a retained earnings statement for the year ended December 31, 2010. BE4-10 Using the information from BE4-9, prepare a retained earnings statement for the year ended December 31, 2010. Assume an error was discovered: land costing $80,000 (net of tax) was charged to repairs expense in 2007.
P4-4 (Multiple- and Single-step Income, Retained Earnings) The following account balances were included in the trial balance of Twain Corporation at June 30, 2010. Sales $1,578,500
Sales discounts 31,150
Cost of goods sold 896,770
Sales salaries 56,260
Sales commissions 97,600
Travel expense—salespersons 28,930
Freight-out 21,400
Entertainment expense 14,820
Telephone and Internet expense—sales 9,030
Depreciation of sales equipment 4,980
Building expense—prorated to sales 6,200
Miscellaneous selling expenses 4,715
Office supplies used 3,450
Telephone and Internet expense— administration 2,820
Depreciation of office furniture and equipment $ 7,250
Real estate and other local taxes 7,320
Bad debt expense—selling 4,850
Building expense—prorated to administration 9,130
Miscellaneous office expenses 6,000
Sales returns 62,300
Dividends received 38,000
Bond interest expense 18,000
Income taxes 102,000
Depreciation understatement due to error—2007 (net of tax) 17,700
Dividends declared on preferred stock 9,000
Dividends declared on common stock 37,0000
The Retained Earnings account had a balance of $337,000 at July 1, 2009. There are 80,000 shares of common stock outstanding. Instructions (a) Using the multiple-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2010. (b) Using the single-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2010.
CHAPTER 5
BE5-2 Koch Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2010: Cash $7,000; Land $40,000; Patents $12,500; Accounts Receivable $90,000; Prepaid Insurance $5,200; Inventory $30,000; Allowance for Doubtful Accounts $4,000; Trading Securities $11,000. Prepare the current assets section of the balance sheet, listing the accounts in proper sequence.
BE5-4 Lowell Company’s December 31, 2010, trial balance includes the following accounts: Inventories $120,000; Buildings $207,000; Accumulated Depreciation–Equipment $19,000; Equipment $190,000; Land Held for Investment $46,000; Accumulated Depreciation–Buildings $45,000; Land $71,000; Timberland $70,000. Prepare the property, plant, and equipment section of the balance sheet
BE5-6 Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2010: Prepaid Rent $12,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Franchises $47,000; Patents $33,000; Trademarks $10,000. Prepare the intangible assets section of the balance sheet
BE5-8 Included in Adams Company’s December 31, 2010, trial balance are the following accounts: Accounts Payable $220,000; Pension Liability $375,000; Discount on Bonds Payable $29,000; Advances from Customers $41,000; Bonds Payable $400,000; Wages Payable $27,000; Interest Payable $12,000; Income Taxes Payable $29,000. Prepare the current liabilities section of the balance sheet.
BE5-10 Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2010: Retained Earnings $120,000; Common Stock $750,000; Bonds Payable $100,000; Additional Paid-in Capital $200,000; Goodwill $55,000; Accumulated Other Comprehensive Loss $150,000. Prepare the stockholders’ equity section of the balance sheet
BE5-12 Keyser Beverage Company reported the following items in the most recent year.
Net income $40,000
Dividends paid 5,000
Increase in accounts receivable 10,000
Increase in accounts payable 7,000
Purchase of equipment (capital expenditure) 8,000
Depreciation expense 4,000
Issue of notes payable 20,000
Compute net cash provided by operating activities, the net change in cash during the year, and free cash flow BE5-14 Martinez Corporation engaged in the following cash transactions during 2010.
Sale of land and building $191,000
Purchase of treasury stock 40,000
Purchase of land 37,000
Payment of cash dividend 95,000
Purchase of equipment 53,000
Issuance of common stock 147,000
Retirement of bonds 100,000
Compute the net cash provided (used) by investing activities
BE5-16 Using the information in BE5-14, determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000.
P5-6 (Preparation of a Statement of Cash Flows and a Balance Sheet) Lansbury Inc. had the balance sheet shown on the following page at December 31, 2009
1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available-for-sale.
2. A tract of land was purchased for $18,000 cash.
3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash. 4. An additional $20,000 in common stock was issued at par.
5. Dividends totalling $8,200 were declared and paid to stockholders.
6. Net income for 2010 was $32,000 after allowing for depreciation of $11,000.
7. Land was purchased through the issuance of $30,000 in bonds.
8. At December 31, 2010, Cash was $32,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000.
Instructions
(a) Prepare a statement of cash flows for 2010.
(b) Prepare an unclassified balance sheet as it would appear at December 31, 2010.
(c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.
