E4-3 From the foregoing, computer the following: (a) total net revenue, (b) net income, (c) dividends declared during the current year.(Single-Step Income Statement) The financial records of LeRoi Jones INC. were destroyed by fire at the end of 2007. Fortunately the controller had kept certain statistical data related to the income statement as presented below.1.The beginning merchandise inventory was $92000 and decreased 20% during the current year. 2. Sales discount amounts to $17000 3. 20,000 shares of common stock were outstanding for the entire year. 4. Intreset expense was $20000 5. The income tax rate was 30% 6. Cost of goods sold amounts to $500,000 7. Administrative expenses are 20% of cost of goods sold buy only 8% of gross sales. 8. For-fifths of the operating expenses relate to sales activities.From the foregoing information prepare an imcome statement for the year 2007 in Single-step Form.*E4-4(Multiple Step and single-step) P. Briede Company ($000omited)Administrate expense Officers’ salaries 4900 Depreciated of office furniture and equipment 3960 Cost of sales good 60570 Rental revenue 17230 Selling expense Transportation-out 2690 Sales Commissions 7980 Depreciation of sales equipment 6480 Sales 96500 Income Tax 9070 Interest Expense 1860(Instructions) a. Prepare an income statement for the year 2007 using the multiple-step form. Common shares out-standing for 2007 total 40,550($000 omitted). b. Prepare an income statement for the year 2007 using the single step form c. Which one do you prefer? Disuses.P4-1 (Multiple-step Income, Retained earnings) Presented below is information related to American horse company for 2007.Retained earnings balance, January 1, 2007 $980,000 Sales for the year 25,000,000 Cost of goods sold 17,000,000 Interest revenue 70,000 Selling and administrative expense 4,700,000 Write-off of goodwill (no tax deductible) 820,000 Income taxes for 2007 905,000 Gain on sales the sales of investments (normal recurring) 110,000 Loss due to flood damaged-extraordinary item (net of tax) 390,000 Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 90,000 Dividends declared on common stock 250,000 Dividends declared on preferred stock 70,000Instructions: Prepare a multiple step income statement and a retained earnings statement. American Horse Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, American Horse sold the wholesale operations to Rogers Company. During 2007, there were 30,000 shares of common stock outstanding all year.E5-1(Balance Sheet Classifications) Presented below are a number of balance sheets accounts of Deep Blue Something, Inc.a. Invstments in Prefferred Stock b. Treasury Stock c. Common Stock d. Cash Dividends Payable e. Accumulated Depreciation f. Warehouse in Process of Construction g. Petty Cash h. Accrued Interest on Notes Payable i. Deficit j. Trading Securities k. Income Taxes Payable l. Unearned Subscription Revenue m. Work in Process n. Accrued Vacation payInstructions For each of the accounts above, indicate the proper balance sheet classification. In the case of border line items, indicate the additional information that would be required to determine the proper classification. E5-13 Statement of Cash Flows – Classifications) The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as:1. Operating activity- add to net income. 2. Operating activity – deduct from net income. 3. Investing activity. 4. Financing activity. 5. Reported as significant noncash activity.The transactions are as follows.a. Issuance of capital stock b. Prucahsed of land and building c. Redemption of bonds d. Sale of equipment e. Depreciation of machinery f. Amortization of patent g. Issuance of bonds for plant assests h. Payment of cash dividends i. Exchange of furniture for office equipment j. Purchase of treasury stock k. Loss on sale of equipment l. Increase in accounts receivable during the year m. Decrease in accounts payable during the year.E-17 (Preparation of statement of cash flows and a balance Sheet) Grant wood corporation’s balance sheet at the end of 2006 included the following items.Current assets $235000 Land 30000 Building 120000 Equipment 90,000 Accum. Depr. – Building (30,000) Accum Depr. Equipment (11,000) Patents 40,000 Total $474,000Current liabilities $150,000 Bonds payable 100,000 Common Stock 180,000 Retained earnings 44,000 Total $474,000The following information is available for 2007.1. Net income was $55,000 2. Equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $10,000) 3. Depreciation expense was $4,000 on the building and $9,000 on equipment 4. Patent amortization was $2,500 5. Current assets other than cash increased by $29,000. Current liabilities increased by $13,000. 6. An addition to the building was completed at a cost of $27,000 7. A long term investment in stock was purchased for $16,000 8. Bonds payable of $50,000 were issued 9. Cash dividends of $30,000 were declared and paid 10. Treasury stocks was purchased at a cost of $11000.Instructions Show only totals for current assets and current liabilities. a. Prepare a statement of cash flows for 2007. b. Prepare a balance sheet at December 31, 2007Review 1. Which of the following is a limitation of the balance sheet? (Points: 1) Many items that are of financial value are omitted Judgments and estimates are used Current fair value is not reported All of the above2. The balance sheet is useful for analyzing all of the following except _______________. (Points: 1) liquidity solvency profitability financial flexibility3. The correct order to present current assets is _______________. (Points: 1) cash, accounts receivable, prepaid items, inventories cash, accounts receivable, inventories, prepaid items cash, inventories, accounts receivable, prepaid items cash, inventories, prepaid items, accounts receivable4. The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in (Points: 1) inventory back into cash, or 12 months, whichever is shorter. receivables back into cash, or 12 months, whichever is longer. tangible fixed assets back into cash, or 12 months, whichever is longer. inventory back into cash, or 12 months, whichever is longer.5. The current assets section of the balance sheet should include _______________. (Points: 1) machinery patents goodwill inventory6. An example of an item which is not an element of working capital is (Points: 1) accrued interest on notes receivable. goodwill. goods in process. temporary investments.7. Stanton Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000 and retained earnings, $363,000. What total amount should Stanton Company report as stockholders' equity? (Points: 1) $898,000. $998,000. $1,098,000. $1,198,000.8. Quince Holman Corporation reports:Cash provided by operating activities $250,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance 70,000What is Holman's ending cash balance? (Points: 1) $280,000 $350,000 $500,000 $570,0009. Gordman Corporation reports:Cash provided by operating activities $200,000 Cash used by investing activities 110,000 Cash provided by financing activities 140,000 Beginning cash balance 70,000What is Gordman's ending cash balance? (Points: 1) $230,000 $300,000 $450,000 $520,00010. Craig Rusch Corporation reports the following information:Net income $500,000 Depreciation expense 140,000 Increase in accounts receivable 60,000Rusch should report cash provided by operating activities of (Points: 1) $300,000. $420,000. $580,000. $700,000.11. Porter Corporation reports the following information:Net income $250,000 Depreciation expense 70,000 Increase in accounts receivable 30,000Porter should report cash provided by operating activities of (Points: 1) $150,000. $210,000. $290,000. $350,000.12. Morgan Corporation reports the following information:Net cash provided by operating activities $255,000 Average current liabilities 150,000 Average long-term liabilities 100,000 Dividends paid 60,000 Capital expenditures 110,000 Payments of debt 35,000Morgan's free cash flow is (Points: 1) $50,000. $85,000. $145,000. $195,000.