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From the foregoing, computer the following:

Resolved Question:

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.*


(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

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     70,000

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 pay

     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                $474,000

Current liabilities      $150,000
Bonds payable     100,000
Common Stock      180,000
Retained earnings      44,000
Total                $474,000

The 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.

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, 2007

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 above

2. The balance sheet is useful for analyzing all of the following except _______________. (Points: 1)
       financial flexibility

3. 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 receivable

4. 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)

6. An example of an item which is not an element of working capital is (Points: 1)
       accrued interest on notes receivable.
       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)

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 70,000

What is Holman's ending cash balance? (Points: 1)

9. 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 70,000

What is Gordman's ending cash balance? (Points: 1)

10. Craig Rusch Corporation reports the following information:

Net income $500,000
Depreciation expense   140,000
Increase in accounts receivable 60,000

Rusch should report cash provided by operating activities of (Points: 1)

11. Porter Corporation reports the following information:

Net income $250,000
Depreciation expense 70,000
Increase in accounts receivable 30,000

Porter should report cash provided by operating activities of (Points: 1)

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 35,000

Morgan's free cash flow is (Points: 1)
Submitted: 5 years ago.
Category: Homework
Expert:  Neo replied 5 years ago.
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