Quiz 2 Multiple-step income statement: The following are


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Quiz 2 Multiple-step income statement: The following are selected account balances taken from the adjusted trial balance of ABC Corporation. Sales revenue $1,100,000 Cost of Goods Sold 530,500 Cash 90,000 Sales discounts 90,000 Prepaid Insurance 45,000 Accounts Receivable 30,000 Interest expense 13,000 Major casualty loss (extraordinary item) 90,000 Discontinued operation – loss on operations 120,000 Discontinued operation – gain on disposal 60,000 Unearned Revenue 27,000 Accounts Payable 73,000 Dividends 20,000 Income tax expense ? Selling expenses 75,000 Administrative expenses 52,000 Unusual gain 19,500 Note that all of the above items are reported at gross amounts before taxes and have their normal debit or credit balances. Also note that the Income tax expenses will need to be calculated and included where necessary. Additional information: ABC Corporation has a 30% federal income tax rate. Preferred stock dividends declared in 2008 were $20,000 of which $10,000 was not paid until Jan 15th, 2009. The number of common shares authorized are 200,000. The number of common shares issued and outstanding are 100,000. The number of preferred shares authorized are 50,000. The number of preferred shares issued and outstanding are 40,000. A) Select all of the relevant account balances and prepare a multiple-step income statement for 2008 for ABC Corporation that is presented in accordance with generally accepted accounting principles. You are required to provide Basic earnings per share information at the end of the income statement. (Hint: If Basic EPS needs to be broken into sections, include any effects of dividends in the Income from continuing operations EPS amount). B) a. Explain briefly how the presentation of all items in income from continuing operations would differ (if at all) if ABC prepared the income statement format based on the single step approach. b. Explain how the presentation of all items reported after income from continuing operations would differ (if at all) if ABC prepared the income statement format based on the single step approach. ATTACHMENT PREVIEW Download attachment Quiz multiple step IS.doc Quiz 2 Multiple-step income statement: The following are selected account balances taken from the adjusted trial balance of ABC Corporation. Sales revenue Cost of Goods Sold Cash Sales discounts Prepaid Insurance Accounts Receivable Interest expense Major casualty loss (extraordinary item) Discontinued operation – loss on operations Discontinued operation – gain on disposal Unearned Revenue Accounts Payable Dividends Income tax expense Selling expenses Administrative expenses Unusual gain $1,100,000 530,500 90,000 90,000 45,000 30,000 13,000 90,000 120,000 60,000 27,000 73,000 20,000 ? 75,000 52,000 19,500 Note that all of the above items are reported at gross amounts before taxes and have their normal debit or credit balances. Also note that the Income tax expenses will need to be calculated and included where necessary. Additional information: ABC Corporation has a 30% federal income tax rate. Preferred stock dividends declared in 2008 were $20,000 of which $10,000 was not paid until Jan 15 th, 2009. The number of common shares authorized are 200,000. The number of common shares issued and outstanding are 100,000. The number of preferred shares authorized are 50,000. The number of preferred shares issued and outstanding are 40,000. A) Select all of the relevant account balances and prepare a multiple-step income statement for 2008 for ABC Corporation that is presented in accordance with generally accepted accounting principles. You are required to provide Basic earnings per share information at the end of the income statement. (Hint: If Basic EPS needs to be broken into sections, include any effects of dividends in the Income from continuing operations EPS amount). B) a. Explain briefly how the presentation of all items in income from continuing operations would differ (if at all) if ABC prepare…

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