Tamarisk Inc. reported income from continuing operations before taxes during 2017 of $2,200,000. Additional transactions occurring in 2017 but not considered in the $2,200,000 are as follows. 1. A gain of $120,000 (pretax) as a result of selling securities from its investment portfolio. 2. A $21,000 loss before taxes as a result of operating the discontinued clothing division during 2017. 3. A loss of $86,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. 4. An uninsured $126,000 loss due to a fire. 5. At the beginning of 2015, the corporation purchased a machine for $250,000 (salvage value of $30,000) that had a useful life of 10 years. The bookkeeper used straight-line depreciation for 2015, 2016, and 2017, but failed to deduct the salvage value in computing the depreciation base. 6. The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2015 income by $62,000 and decrease 2016 income by $27,000 before taxes. The FIFO method has been used for 2017. Prepare an income statement for the year 2017 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 400,000 shares. (Assume a tax rate of 30% on all items.) (Round earnings per share to 2 decimal places, e.g. 1.48 and all other answers to 0 decimal places, e.g. 5,275.) TAMARISK INC. Income Statement (Partial) choose the accounting period select an income statement item $enter a dollar amount enter a total amount for the first part $enter a dollar amount enter a dollar amount enter a total amount for section one select a closing name for this statement $enter a total net income or loss amount Per share of common stock: select an income statement item $enter a dollar amount select an opening section name select an income statement item enter a dollar amount select an income statement item enter a dollar amount select a closing name for this statement
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Tamarisk Inc. reported income from continuing operations before taxes during 2017 of $2,200,000. Additional transactions occurring in 2017 but not considered in the $2,200,000 are as follows.
| 1. | A gain of $120,000 (pretax) as a result of selling securities from its investment portfolio. | |
| 2. | A $21,000 loss before taxes as a result of operating the discontinued clothing division during 2017. | |
| 3. | A loss of $86,000 before taxes as a result of disposing of its clothing division. Assume that this transaction meets the criteria for discontinued operations. | |
| 4. | An uninsured $126,000 loss due to a fire. | |
| 5. | At the beginning of 2015, the corporation purchased a machine for $250,000 (salvage value of $30,000) that had a useful life of 10 years. The bookkeeper used straight-line |
|
| 6. | The corporation decided to change its method of inventory pricing from average-cost to the FIFO method. The effect of this change on prior years is to increase 2015 income by $62,000 and decrease 2016 income by $27,000 before taxes. The FIFO method has been used for 2017. |
Prepare an income statement for the year 2017 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 400,000 shares. (Assume a tax rate of 30% on all items.) (Round earnings per share to 2 decimal places, e.g. 1.48 and all other answers to 0 decimal places, e.g. 5,275.)
|
TAMARISK INC.
Income Statement (Partial) choose the accounting period |
||||
|---|---|---|---|---|
|
select an income statement item
|
$enter a dollar amount | |||
|
|
||||
| enter a total amount for the first part | ||||
|
|
||||
| $enter a dollar amount | ||||
|
|
enter a dollar amount | |||
| enter a total amount for section one | ||||
|
select a closing name for this statement
|
$enter a total net income or loss amount | |||
|
Per share of common stock:
|
||||
|
select an income statement item
|
$enter a dollar amount | |||
|
select an opening section name
|
||||
|
select an income statement item
|
enter a dollar amount | |||
|
select an income statement item
|
enter a dollar amount | |||
| select a closing name for this statement |
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
