Date Account Title and Explanation DR CR

Jan 1 2019 Investment in Associate - Louis Inc. 18,000

Cash 18,000

Purchased 30% state with 3000 shares at $6

Jan 20 2019 Cash 62,500

Common Shares 62,500

issued 25000 common shares

20-Jan Cash 12,000

Preferred Shares 12,000

Issued 3000 preferred shares

28-Feb Interest Expense 10,346

Discount on Bonds 1,346

Cash 9,000

record interest and discount on bond

1-Mar Cash 172,426

Discount on Bond 7,574

Bond Payable 180,000

Issued bond at 5%

17-Apr Short Term Investment - T Bill 29,852

Cash 29,852

90 day T-bill at 2%

17-May Short Term Investment - T Bill 50

Interest Revenue 50

accrue Interest

30-Jun Cash 600

Long Term Investment - Bond 185

Interest Revenue 785

record payment of interest

1-Jul Long Term Investment - Bond 18,378

Cash 18,378

record purchase of 5 yr bond at 6%

Juy 17 2019 Short Term Investment - T Bill 98

Interest Revenue 98

accrue remaning interest

17-Jul Cash 30,000

Short Term Investment - T Bill 30,000

Dec 31 2019 Cash 600

Long Term Investment - Bond 135

Interest revenue 735

record payment of interest

June 30 2019 Cash 600

Long Term Investment - Bond 185

Interest Revenue 785

record payment of interest

Dec 31 2023 Cash 20,000

Long Term Investment - Bond 20,000

bond reached at maturity

Nov 23 2019 Short Term Investment - Duke Shares 7,500

Cash 7,500

bought 500 shares at $15 per share

Nov 23 Short Term Investment - Duke Shares 7,500

Cash 7,500

bought 500 shares at $15 per share

Dec 31 2019 Cash 600

Long Term Investment - Bond 135

Interest revenue 735

record payment of interest

Dec 31 2023 Cash 20,000

Long Term Investment - Bond 20,000

bond reached at maturity

31-Dec Short Term Investment - Duke Shares 1,500

Gain on Fair Value on Adjustment - Duke Shares 1,500

record fair value adjustment change

Dec 31 Interest Expense 7500

Discount on Bonds

Interest Payable

recording of interest on bonds

- Interest payable will only contain interest accrued.

- Interest revenue is only from items in the journal entries for the year

Assume the tax rate is 30%. Assume income tax has already been paid. You will just have to calculate the income tax expense on the income statement.

Account Title Balance

Accounts Payable $122,000

Accounts Receivable 122,168

Accumulated Depreciation 49,000

Bank Loan 50,000

Bonds Payable

Cash 132,500

Common Shares

Cost of Goods Sold 292,500

Depreciation Expense 35,000

Discount on Bonds

Gain on Fair Value Adjustment

Insurance Expense 1,200

Interest Expense 2,500 -7500

Interest Payable 7,500

Interest Revenue

Inventory 210,160

Investment in Associate - Louis Inc.

Long-Term Investment - Bond

Loss on Fair Value Adjustment

Loss from Discontinued Operations (10,200)

Maintenance Expense 8,000

Preferred Shares

Premium on Bonds

Prepaid Insurance 14,000

Professional Fees Expense 5,400

Property, Plant & Equipment 200,000

Rent Expense 32,000

Revenue from Investment in Associate

Salaries Expense 70,000

Sales Discounts 6,000

Sales Returns and Allowances 7,000

Sales Revenue 650,000

Short-Term Investment - Duke Inc.

Telephone Expense 3,000

Travel Expense 15,400

Unearned Revenue 26,100

Notes:

The bank loan is payable over 5 years and $10,000 will be paid by December 31, 2019.

$45,000 5500 5

Prepare a multistep income statement for the year ending December 31, 2019. Round answers to the nearest whole number.

Prescott Electric Inc.

Income Statement

For the Year Ended December 31, 2019

Sales Revenue $6,500,000

Less: Sales Returns & Allowances 7,000

Sales Discounts 6,000 13,000

Net Sales 637,000

Cost of Goods Sold 292,500

Gross Profit 344,500

Operating Expenses

Depreciation Expense 35,000

Insurance Expense $1,200

Maintenance Expense 8,000

Salaries Expense 70,000

Telephone Expense 3,000

Travel Expense 15,400

Professional Fees Expense 5,400 -170000

Income from Operations 174,500

Other Income (Expenses)

Interest Revenue

Interest Expense 2500 2,500

Income Before Taxes & Operations 172000

Discontinued Operations

Loss from Discontinued Operations -10200

Net Income (Loss) 161800

Calculate the earnings per share for i) Income from Continuing Operations, ii) income from Discontinued Operations and iii) Net Income.