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Income Statement

P 4-1 (a)
For the Year Ended 2010
Revenue
Gross Sales 1,000,000.00
Less: Sales Returns and Allowances 0.00
Net Sales 1,000,000.00

Cost of Goods Sold


Beginning Inventory 650,000.00
Add: Purchases' 460,000.00
Inventory Available 1,110,000.00
Less: Ending Inventory 440,000.00
Cost of Goods Sold 670,000.00

Gross Profit (Loss) 330,000.00

Expenses
Administrative Expense 62,000.00
Interest Expense 20,000.00
Selling Expense 43,000.00
Total Expenses 125,000.00

Net Operating Income 205,000.00

Other Income
Dividend Income 10,000.00
Total Other Income 10,000.00

Earning Before Income Tax 215,000.00


Taxation
Income Taxes 100,000.00
Earning After Income Tax 115,000.00

Less: Flood Loss (Net of Tax) 30,000.00


Net Income 85,000.00

Answer P 4-1 (b)


Earnings per share:
Before extraordinary items 1.15
Extraordinary items (loss) (0.30)
Net income 0.85

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Income Statement
P 4-1 (c) Decher Automotive
For the Year Ended 2010
Revenue
Gross Sales 1,000,000.00
Other Income 10,000.00
Net Sales 1,010,000.00

Expenses
COGS 670,000.00
Operating expenses 125,000.00
Income Tax 100,000.00
Flood Loss (Net of Tax) 30,000.00
Net Income 85,000.00

Income Statement
P 4-2 Lasky Corporation
For the Year Ended Dec 31, 2010
Revenue
Gross Sales 362,000.00
Net Sales 362,000.00

Cost of Goods Sold


Cost of Goods Sold 242,000.00

Gross Profit (Loss) 120,000.00

Expenses
Administrative and General Expense 11,400.00
Interest Expense 2,200.00
Selling Expense 47,000.00
Total Expenses 60,600.00

Net Operating Income 59,400.00

Other Income
Rental Income 1,000.00
Interest Income 2,400.00
Total Other Income 3,400.00

Earnings Before Income Tax 62,800.00


Taxation
Federal and State Income Tax 20,300.00
Net Income 42,500.00

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Income Statement
P 4-3 Consolidated Can
For The Year Ended Dec 31, 2010
Revenue
Gross Sales 480,000.00
Net Sales 480,000.00

Cost of Goods Sold


Cost of Goods Sold 410,000.00

Gross Profit (Loss) 70,000.00

Expenses
Administrative and Selling Expense 42,000.00
Interest Expense 8,700.00
Total Expenses 50,700.00

Net Operating Income 19,300.00

Other Income
Other Income 1,600.00
Total Other Income 1,600.00

Earnings Before Income Tax 20,900.00


Taxation
Income Tax 9,300.00
Extraordinary Gain (Net of tax) 1,000.00
Net Income 12,600.00
Retained Earnings
Retained Earnings (Opening balance) 270,000.00
Less: Dividends 3,000.00
Retained Earnings 279,600.00

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Income Statement
P 4-4 (a) Tapeline Corporation
For the Year Ended Dec 31, 2010
Revenue
Gross Sales 670,000.00
Rental Income 3,600.00
Gain on Sale of Fixed Assets 3,000.00
Net Revenue 676,600.00

Expenses
Cost of Sales 300,000.00
Administrative and General Expense 110,000.00
Selling Expense 97,000.00
Depreciation Expense 10,000.00
Interest Expense 1,900.00
Total Expenses 518,900.00

Income Before Taxes 157,700.00

Taxation
Corporate Tax (40%) 63,080.00
Extraordinary Loss (Casualty Loss) 30,000.00
Less: Tax Savings 12,000.00
Net Income 76,620.00

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Income Statement
P 4-4 (b) Tapeline Corporation
For the Year Ended Dec 31, 2010
Revenue
Gross Sales 670,000.00
Net Sales 670,000.00

Cost of Goods Sold


Cost of Goods Sold 300,000.00

Gross Profit (Loss) 370,000.00

Expenses
Administrative and General Expense 110,000.00
Interest Expense 1,900.00
Depreciation Expense 10,000.00
Selling Expense 97,000.00
Total Expenses 218,900.00

Net Operating Income 151,100.00

Other Income
Rental Income 3,600.00
Gain on Sale of Fixed assets 3,000.00
Total Other Income 6,600.00

Earnings Before Income Tax 157,700.00


Taxation
Income Taxes (40%) 63,080.00
Earning After Income Tax 94,620.00

Extraordinary Loss (Casualty Loss) 30,000.00


Less: Tax Saving 12,000.00
Net Income 76,620.00

Answer P 4-5
Not Solved

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Answer P 4-6
1) Sales is 2 million Because Administrative is 20% of Cost of Goods Sold which is 1
Million and 10% of Sales, therefore sales is 2 million.
2) From the above solution, we can estimate Admin Expense which is 10% of sales
40,00,000 x 10% = 400,000.
3) Selling Expense is 150% of 400,000 which is equal to 600,000.
4) Bonds payables interest expense is 110,000 (10,00,000 x 11%).

Income Statement
P 4-6
For the Year Ended Dec 31, 2010
Revenue
Gross Sales 4,000,000.00
Net Sales 4,000,000.00

Cost of Goods Sold


Cost of Goods Sold 2,000,000.00
Gross Profit (Loss) 2,000,000.00

Expenses
Administrative Expense 400,000.00
Selling Expense 600,000.00
Interest Expense 110,000.00
Total Expenses 1,110,000.00

Earnings Before Taxes 890,000.00

Taxation
Income Taxes (48%) 427,200.00
Earning After Income Tax 427,200.00

Net Income 462,800.00

Earning Per Share is (462,800 / 50000) 9.256

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Answer P 4-7
Total revenues from regular operations $832,000
Total expenses from regular operations (776,000)
Income from operations 56,000
Extraordinary gain, net of tax _ 30,000_
Net Income 86,000
The following data will be shown in Financial Statements as:
Earnings Per Share (86000/10000) 8.60

Answer P 4-8
Not Solved

Answer P 4-11
a) Net Income + Extra Ordinary losses from Flood
20,000 + 120,000 = 140,000
b) 60000
c) 60000
d) 40000
e) 50000

Answer P 4-12
a. Net income from operations

b. 20,000 Loss

c. 94,000
-30,000
-50,000
+25,000
39,000

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