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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Comprehensive: Income Statement and Supporting Schedules The following s a partial list of the account balances, after adjustments, of Silvoso Company on December 31, 2019:

Chapter 5, Problem 17P, Comprehensive: Income Statement and Supporting Schedules The following s a partial list of the , example  1

The following information is also available:

  1. 1. The company declared and paid a $0.60 per share cash dividend on its common stock. The stock was outstanding the entire year.
  2. 2. A physical count determined that the December 31, 2019, ending inventory is $34,100.
  3. 3. A tornado destroyed a warehouse, resulting in a pretax loss of $12,000. The last tornado in this area had occurred 10 years earlier.
  4. 4. On May 1, 2019, the company sold an unprofitable division (R). From January through April, Division R (a major component of the company) had incurred a pretax operating loss of $8,700. Division R was sold at a pretax gain of $10,000.
  5. 5. The company is subject to a 30% income tax rate. Its income tax expense for 2019 totals $4,230. The breakdown is as follows:

Chapter 5, Problem 17P, Comprehensive: Income Statement and Supporting Schedules The following s a partial list of the , example  2

  1. 6. The company had average shareholders’ equity of $150,000 during 2019.

Required:

  1. 1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense.
  2. 2. Prepare a 2019 multiple-step income statement for Silvoso. Include any related note to the financial statements.
  3. 3. Prepare a 2019 retained earnings statement.
  4. 4. Next Level What was Silvoso’s return on common equity for 2019? What is your evaluation of Silvoso’s return on common equity if last year it was 10%?

1.

To determine

Provide supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense.

Explanation

Cost of goods sold: Cost of goods sold is the total of all the expenses incurred by a company to sell the goods during the given period.

Schedule of cost of goods sold is a report which reports cost of goods sold in a detailed manner.

Provide the schedule of cost of goods sold:

Company S
For the Year Ended December 31, 2019
Schedule 1: Cost of goods sold
ParticularsAmountAmount
($)($)
Beginning inventory $37,800
Add: Purchases$173,000  
         Transportation in$13,500  
Cost of purchases$186,500  
Less: Purchase discount taken($4,100) 
          Purchases returns and allowances($6,200) 
Net purchases $176,200
Cost of goods available for sale $214,000
Less: Ending inventory ($34,100)
Cost of goods sold $179,900

Table (1)

Provide the schedule of selling expenses:

Company S
For the Year Ended December 31, 2019
Schedule 2: Selling Expenses
ParticularsAmount ($)Amount ($)
Selling expenses:  
      Sales commission salaries$18,200  
      Sales supplies used$5,600  
   &...

2.

To determine

Provide a multi-step income statement for the year 2019.

3.

To determine

Provide a retained earnings statement for the year 2019.

4.

To determine

Evaluate the return on common equity if it was 10% last year for Company S.

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