Exam 4: Income Statement and Related Information

Edmonds Corporation reports the following information: Net income \ 500,000 Dividends on common stock 140,000 Dividends on preferred stock 60,000 Weighted average common shares outstanding 200,000 Edmonds should report earnings per share of

For Garret Wolfe Company, the following information is available: Cost of goods sold \ 60,000 Dividend revenue 2,500 Income tax expense 6,000 Operating expenses 23,000 Sales 100,000 In Garret Wolfe's multiple-step income statement, gross profit

Use the following information for questions Meyer Corp.reports operating expenses in two categories: (1) selling and (2) general and administrative.The adjusted trial balance at December 31, 2007, included the following expense accounts: Accounting and legal fees \ 140,000 Advertising 120,000 Freight-out 75,000 Interest 60,000 Loss on sale of long-term investments 30,000 Officers' salaries 180,000 Rent for office space 180,000 Sales salaries and commissions 110,000 One-half of the rented premises is occupied by the sales department. -How much of the expenses listed above should be included in Meyer's selling expenses for 2007?

The occurrence which most likely would have no effect on 2007 net income (assuming that all amounts involved are material) is the

For Merando Company, the following information is available: Cost of goods sold \ 90,000 Dividend revenue 4,000 Income tax expense 9,000 Operating expenses 35,000 Sales 150,000 In Merando's multiple-step income statement, gross profit

Which of the following is an acceptable method of presenting the income statement?

In order to be classified as an extraordinary item in the income statement, an event or transaction should be

If plant assets of a manufacturing company are sold at a gain of $820,000 less related taxes of $250,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as

Companies report the results of operations of a component of a business that will be disposed of separately from continuing operations.

Which of these is generally an example of an extraordinary item?

Use the following information for questions At Hall Company, events and transactions during 2007 included the following.The tax rate for all items is 30%. (1) Depreciation for 2005 was found to be understated by $30,000. (2) A strike by the employees of a supplier resulted in a loss of $25,000. (3) The inventory at December 31, 2005 was overstated by $40,000. (4) A flood destroyed a building that had a book value of $500,000.Floods are very uncommon in that area. -The effect of these events and transactions on 2007 net income net of tax would be

The major elements of the income statement are

Use the following information for questions Hogan Corp.'s trial balance of income statement accounts for the year ended December 31, 2007 included the following: Debit Credit Sales \1 40,000 Cost of sales \ 50,000 Administrative expenses 25,000 Loss on sale of equipment 9,000 Commissions to salespersons 8,000 Interest revenue 5,000 Freight-out 3,000 Loss due to earthquake damage 12,000 Bad debt expense 3,000 Totals \ 110.000 \ 145.000 Other information: Hogan's income tax rate is 30%.Finished goods inventory: January 1,2007 \ 80,000 December 31,2007 70,000 On Hogan's multiple-step income statement for 2007, -Cost of goods manufactured is

The accounting profession has adopted a current operating performance approach to income reporting.

When a company discontinues an operation and disposes of the discontinued operation (component), the transaction should be included in the income statement as a gain or loss on disposal reported as

Gross billings for merchandise sold by Otto Company to its customers last year amounted to $15,720,000; sales returns and allowances were $370,000, sales discounts were $175,000, and freight-out was $140,000.Net sales last year for Otto Company were

Simmons Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax 430,000 Dividends declared 320,000 Net income 1,000,000 Retained earnings, 1/1/07, as reported 2,000,000 Simmons should report retained earnings, 12/31/07, as adjusted at

Dividends declared on common and preferred stock are subtracted from net income in the computation of earnings per share.

A review of the December 31, 2007, financial statements of Baden Corporation revealed that under the caption "extraordinary losses," Baden reported a total of $515,000.Further analysis revealed that the $515,000 in losses was comprised of the following items: (1) Baden recorded a loss of $150,000 incurred in the abandonment of equipment formerly used in the business. (2) In an unusual and infrequent occurrence, a loss of $250,000 was sustained as a result of hurricane damage to a warehouse. (3) During 2007, several factories were shut down during a major strike by employees, resulting in a loss of $85,000. (4) Uncollectible accounts receivable of $30,000 were written off as uncollectible. Ignoring income taxes, what amount of loss should Baden report as extraordinary on its 2007 income statement?

Dan Nicholson Corporation has an extraordinary loss of $50,000, an unusual gain of $35,000, and a tax rate of 40%.At what amount should Dan Nicholson report each item? $\begin{array}{cc}&\text { Extraordinary loss } & \text { Unusual gain } \\\hline a.&\$(50,000) & \$ 35,000 \\b.&(50,000) & 21,000 \\c.&(30,000) & 35,000 \\d.&(30,000) & 21,000\end{array}$