EXERCISE 36 Below are the changes in account balances, except for retained earnings, for Desert Dorm Ltd., for the 2015 fiscal year: Account increase (decrease) Accounts payable $ (23,400) Accounts receivable (net) 15,800 Bonds payable 46,500 Cash 41,670 Common shares 87,000 Contributed surplus 18,600 Inventory 218,400 Investments held for trading (46,500) Intangible assets patents 14,000 Unearned revenue 45,200 Retained earnings ?? Required: Calculate the net income for 2015, assuming that there were no entries in the retained earnings account except for net income and a dividend declaration of $44,000, which was paid in 2015. (Hint: using the accounting equation A = L+ E to help solve this question) Exercises 69

EXERCISE 37 In 2015, Imogen Co. reported net income of $575,000, and declared and paid preferred share dividends of $75,000. During 2015, the company had a weighted average of 66,000 common shares outstanding. Required: Calculate the companys basic earnings per share.

EXERCISE 38 A list of selected accounts for Opi Co. is shown below. All accounts have normal balances. The income tax rate is 30%. Opi Co. For the year ended December 31, 2015 Accounts payable $ 63,700 Accounts receivable 136,500 Accumulated depreciation building 25,480 Accumulated depreciation equipment 36,400 Administrative expenses 128,700 Allowance for doubtful accounts 6,500 Bond payable 130,000 Buildings 127,400 Cash 284,180 Common shares 390,000 Cost of goods sold 1,020,500 Dividends 58,500 Equipment 182,000 Error correction for understated cost of goods sold from 2014 13,500 Freight-out 26,000 Gain on disposal of discontinued operations South Division 27,560 Gain on sale of land 39,000 Inventory 161,200 Land 91,000 Miscellaneous operating expenses 1,560 Notes payable 91,000 Notes receivable 143,000 Rent revenue 23,400 Retained earnings 338,000 Salaries and wages payable 23,500 Sales discounts 18,850 Sales returns and allowances 22,750 Sales revenue 1,820,000 Selling expenses 561,600 70 Financial Reporting Required: a. Prepare a single-step income statement with expenses by function and a separate statement of retained earnings assuming that Opi is a private company that follows ASPE. b. Prepare a combined single-step income statement and retained earnings by function assuming ASPE.

EXERCISE 39 Below are adjusted accounts and balances for Ace Retailing Ltd. for the year ended December 31, 2015: Cost of goods sold 750,000 Dividends declared (common shares) 245,000 Dividends declared (preferred shares) 82,000 Gain on disposal of discontinued J division 115,000 Gain on sale of held for trading investments 45,000 Interest income 15,000 Loss on impairment of goodwill 12,000 Loss due to warehouse fire 175,000 Loss from operation of discontinued J division 285,000 Loss on disposal of unused equipment from F division 82,000 Retained earnings, January 1, 2015 458,000 Sales revenue 1,500,000 Selling and administrative expenses 245,000 Unrealized gain on Available-for-sale investments (OCI) 18,600 Additional information: 1. Ace decided to discontinue the J division operations. A formal plan to dispose of J division has been completed. There are no plans to dispose of F division at this time. 2. During 2015, 400,000 common shares were outstanding with no shares activity for 2015. 3. Aces tax rate is 27%. 4. Ace follows IFRS and accounts for its investments in accordance with IAS 39 meaning that any unrealized gains/losses are reported through net income. Exercises 71 Required: a. Prepare a multiple-step statement of income for the year ended December 31, 2015, in good form reporting expenses by function. b. Prepare a combined statement of income and comprehensive income in good form reporting expenses by function. c. How would the answer in part (b) differ if a statement of comprehensive income were to be prepared without combining it with the statement of income? d. Prepare a single-step statement of income in good form reporting expenses by function. e. Explain what types of items are to be reported in other revenue and expenses as part of continuing operations, and provide examples for a retail business.