Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 5, Problem 5.7P
Multiple-step, Single-step, and Condensed Statements of Net Income. Statement of Comprehensive Income, Two-Statement Approach. Delaney Products, Inc. provided the following information from its current-year
Delaney Products, Inc.
Trial Balance (Partial)
For the Year Ended December 31
Account | Debit | Credit |
Common Stock (no par)—Beginning Balance | $ 82,000 | |
Retained Earnings—Beginning Balance | 750,000 | |
Accumulated Other Comprehensive Income—Beginning Balance | 210,000 | |
Dividends | $ 125 | |
Sales | 400,000 | |
Dividend Income | 866 | |
Interest Income | 4,000 | |
Gain on Disposal of Plant Assets | 890 | |
Unrealized Gain on Trading Securities | 200 | |
Cost of Goods Sold | 25,000 | |
Selling Expenses | 5,000 | |
Advertising Expense | 7,000 | |
Office Salaries Expense | 6,700 | |
Sales Salaries Expense | 2,100 | |
Office Supplies Expense | 2,000 | |
Accounting and Legal Fees—Administrative | 300 | |
Systems Consulting Fees—Administrative | 350 | |
Amortization Expense—Administrative | 5,500 | |
8,250 | ||
Interest Expense | 900 | |
Unrealized Loss on Available-for-Sale Investments—Before Tax | 933 | |
Loss on Asset Impairment | 467 | |
Loss on Discontinued Operations—Before Tax | 1,000 |
Delaney issued $55,000 of common stock on October 1 of the current year The company also repurchased $13,500 of its shares at the end of the reporting period The company is subject to a 40% income tax rate.
Required
- a. Prepare an income statement for the current year using each reporting format (single-step, multiple stop, and condensed, multiple stop with supporting disclosures). Round to the nearest dollar.
- b. Prepare a separate statement of comprehensive income for the current year.
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Simon Company's year-end balance sheets follow.
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
Total liabilities and equity
Current Year
Interest expense
Income tax expense
Total costs and expenses
Net income
Earnings per share
$ 26,605
89, 200
114,500
8,568
221, 258
$ 460,131
$ 112,281
84,775
162,500
100,575
1 Year Ago
$ 65,696
89,408
162,500
79,061
$ 460, 131 $ 396,665
Current Year
$ 31,099
62,900
85,000
8,163
209,503
$ 396,665
$364,884
185,433
10,169
7,776
The company's income statements for the current year and one year ago follow. Assume that all sales are on credit:
For Year Ended December 31
Sales
Cost of goods sold
Other operating expenses
$ 598,170
2 Years Ago
$ 32,725
50,800
58,000
3,636
192, 139
$…
Multiple-Step Income Statement and Report Form of Balance Sheet
The following selected accounts and their current balances appear in the ledger of Prescott Inc. for the fiscal year ended September 30, 20Y8:
Cash
$187,875
Retained Earnings (as of Sept. 30, 20Y7)
$ 571,050
Accounts Receivable
337,500
Dividends
281,250
Inventory
850,500
Sales
8,025,750
Estimated Returns Inventory
78,750
Cost of Goods Sold
4,893,750
Office Supplies
33,750
Sales Salaries Expense
874,800
Prepaid Insurance
27,000
Advertising Expense
103,275
Office Equipment
259,200
Depreciation Expense— Store Equipment
18,675
Accumulated Depreciation— Office Equipment
111,375
Miscellaneous Selling Expense
4,500
Store Equipment
1,150,875
Office Salaries Expense
174,150
Accumulated Depreciation— Store Equipment
420,075
Rent Expense
89,775
Accounts Payable
109,350
Insurance Expense
51,638
Customer Refunds Payable…
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts
at December 31 of the prior year were inventory, $50,900; total assets, $199,400; common stock, $81,000; and retained earnings,
$48,724.)
CABOT CORPORATION
Balance Sheet
December 31 of current year
Liabilities and Equity
Assets
Cash
Short-term investments
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
$ 16,000 Accounts payable
8,200 Accrued wages payable
30,600 Income taxes payable
40,150 Long-term note payable, secured by mortgage on plant assets
3,050 Common stock
153,300 Retained earnings
$ 251, 300 Total liabilities and equity
$ 18,500
4,400
3,000
63,400
81,000
81,000
$ 251, 300
Total assets
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
$ 454,600
297,150
157,450
99,100
4,300
54,050
21,774
Sales
Cost of goods sold
Gross profit
Operating expenses
Interest expense
Income before taxes
Income tax…
Chapter 5 Solutions
Intermediate Accounting
Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - What are the six key items to be reported on the...Ch. 5 - Explain why operating income is an important...Ch. 5 - Prob. 5.13QCh. 5 - Prob. 5.14QCh. 5 - What items are included in net income?Ch. 5 - Are items of other comprehensive income included...Ch. 5 - What two choices must companies make when...Ch. 5 - Prob. 5.18QCh. 5 - Prob. 5.19QCh. 5 - Are companies reporting under U.S. GAAP required...Ch. 5 - What accounts are summarized on the statement of...Ch. 5 - What is financial statement analysis?Ch. 5 - Prob. 5.23QCh. 5 - What are comparative financial statements and why...Ch. 5 - What is the difference between vertical and...Ch. 5 - Prob. 5.26QCh. 5 - Explain the difference between return on equity...Ch. 5 - How is a companys profit margin calculated?Ch. 5 - Prob. 5.1MCCh. 5 - Moore Furniture Inc., a public company, has...Ch. 5 - Beach and Poole, CPA is reviewing income statement...Ch. 5 - Prob. 5.4MCCh. 5 - Allison Corporations current year income from...Ch. 5 - Prob. 5.6MCCh. 5 - Chili Co. had the following balances at December...Ch. 5 - Szuba Corporation reported the following...Ch. 5 - Prob. 5.9MCCh. 5 - Prob. 5.1BECh. 5 - Prob. 5.2BECh. 5 - Advantages and Disadvantages of the Income...Ch. 5 - Identify each of the earnings items as primarily...Ch. 5 - Income Statement Presentation. Place the...Ch. 5 - Statement of Net Income Presentation, IFRS. Which...Ch. 5 - Single-Step Statement of Net Income. Carr...Ch. 5 - Statement of Net Income, IFRS. Using the...Ch. 5 - Multiple-Step Statement of Net Income. Using the...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Prob. 5.11BECh. 5 - Prob. 5.12BECh. 5 - Discontinued Operations. Jojo, Inc. held a...Ch. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Prob. 5.16BECh. 5 - Computation of Retained Earnings. Taxi Cabs, Inc...Ch. 5 - Computation of Contributed Capital. Using the...Ch. 5 - Prob. 5.19BECh. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Ratio Analyses. Green Grasshopper Incorporated is...Ch. 5 - Multiple-Step and Single-Step Statements of Net...Ch. 5 - Condensed Statement of Net Income. Using the trial...Ch. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Multiple-step Statement of Net Income. The current...Ch. 5 - Condensed Statement of Net Income. Using the...Ch. 5 - Multiple-step income Statement. Ciara s Cookie...Ch. 5 - Prob. 5.8ECh. 5 - Prepare Statement of Stockholders' Equity. Dane...Ch. 5 - Prepare Statement of Stockholders Equity. Ciaras...Ch. 5 - Prepare a Statement of Stockholders' Equity....Ch. 5 - Profitability Analyses. Use the following excerpt...Ch. 5 - Multiple-Step and Single-Step income Statement,...Ch. 5 - Condensed Income Statement. Using the information...Ch. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Net Income Presentation. IFRS....Ch. 5 - Income Statement Presentation, Classification, and...Ch. 5 - Prob. 5.6PCh. 5 - Multiple-step, Single-step, and Condensed...Ch. 5 - Statement of Comprehensive Income Single-and...Ch. 5 - Prepare Statement of Stockholders Equity. Use the...Ch. 5 - Prob. 5.10PCh. 5 - Prob. 1JCCh. 5 - Prob. 1FSCCh. 5 - Prob. 2FSCCh. 5 - Prob. 1SSCCh. 5 - Surfing the Standards Case 2: Amounts Paid by...Ch. 5 - Prob. 1BCCCh. 5 - Prob. 2BCC
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