P7-5A part (a,b) The ledgers of Mid City Galleries


Question Description:

30

May 11, 2012. P7-5A part (a,b) The ledgers of Mid City Galleries Inc. contain the following balances as of December 31, 2008. Advertising expense $123,000 Commissions expense on art sales 1,200,000 Depreciation expense (administrative) 98,000 Dividend revenue 50,000 Insurance expense 600,000 Interest expense 98,000 Inventory, January1 1,650,000 Inventory, December 31 1,424,000 Loss on the sale of office equipment 21,300 Miscellaneous administrative expenses 53,200 Miscellaneous selling expenses 39,000 Net purchases 3,200,000 Net sales 9,275,000 Rent expense 808,000 Freight-in 232,000 Freight-out 82,500 Utilities expense 117,000 Wages and salaries 1,264,000 Income taxes are calculated at 30 percent of income. The galleries had 90,000 shares of common stock outstanding for the entire year. Total assets amounted to $7,509,000, and common stockholder’s equity was $3,975,400. Complete in good form the multiple-step income statement for Mid City Galleries. (List expenses form largest to smallest e.g. 10, 5, 3, 2. Round earnings per share to 2 decimal places, e.g. 10.50 and all other answers to 0 decimal places, e.g. 125. Enter all amounts as positive amounts and subtract where necessary.) MID CITY GALLERIES, INC. Income Statement For the Year Ended December 31, 2008December 31, 2008 Assets Beginning inventoryUtilities expenseMiscellaneous administrative expensesNet salesDividend revenueWages and salariesIncome tax expenseCommissions expenseLoss of sale of office equipmentAdvertising expenseInterest expenseEarnings per shareRent expenseEnding inventoryNet purchasesFreight-inMiscellaneous selling expensesFreight-outInsurance expenseDepreciation expense $ Cost of goods sold Utilities expenseWages and salariesMiscellaneous selling expensesInterest expenseDepreciation expenseCommissions expenseAdvertising expenseIncome tax expenseFreight-inEnding inventoryFreight-outEarnings per shareInsurance expenseRent expenseDividend revenueBeginning inventoryLoss of sale of office equipmentNet salesMiscellaneous administrative expensesNet purchases $ Wages and salariesDividend revenueLoss of sale of office equipmentFreight-inDepreciation expenseInterest expenseMiscellaneous administrative expensesRent expenseIncome tax expenseEnding inventoryEarnings per shareCommissions expenseMiscellaneous selling expensesFreight-outBeginning inventoryNet purchasesInsurance expenseNet salesAdvertising expenseUtilities expense $ Miscellaneous selling expensesLoss of sale of office equipmentAdvertising expenseNet purchasesIncome tax expenseEarnings per shareMiscellaneous administrative expensesWages and salariesInsurance expenseFreight-inFreight-outUtilities expenseDividend revenueEnding inventoryCommissions expenseNet salesDepreciation expenseRent expenseInterest expenseBeginning inventory Goods available for sale Interest expenseLoss of sale of office equipmentEnding inventoryFreight-inCommissions expenseIncome tax expenseEarnings per shareNet purchasesNet salesFreight-outBeginning inventoryWages and salariesAdvertising expenseMiscellaneous selling expensesDividend revenueInsurance expenseDepreciation expenseRent expenseUtilities expenseMiscellaneous administrative expenses Cost of goods sold Gross profit Operating expenses Selling expenses Utilities expenseBeginning inventoryEarnings per shareMiscellaneous administrative expensesRent expenseFreight-inLoss of sale of office equipmentWages and salariesDividend revenueInterest expenseCommissions expenseIncome tax expenseNet salesNet purchasesEnding inventoryFreight-outAdvertising expenseMiscellaneous selling expensesInsurance expenseDepreciation expense Depreciation expenseInsurance expenseNet salesEarnings per shareFreight-inFreight-outAdvertising expenseEnding inventoryMiscellaneous administrative expensesWages and salariesMiscellaneous selling expensesRent expenseUtilities expenseNet purchasesBeginning inventoryDividend revenueLoss of sale of office e…

Answer

30