I need help with P 4-2 I'm sending you attachment this is the only problem I need help with Thanks for any help you can give
Intermediate Accounting LP 3: Question: Q 16- Indicate where the following items would ordinarily appear on the financial statements of Boleyn, Inc. for the year 2012. Answer found on pg 163 (a) The service life of certain equipment was changed form 8 to 5- year life had been used previously, additional depreciation of$425,000 would have been charged. Answer: Losses- Decreased in equity (net assets) from peripheral or incidental transactions of an entity except these that results from expenses or distributions to owner? (b) In 2012, a flood destroyed a warehouse that had a book value of $1,600,000. Floods are rare in this locality. Answer: Losses- Decreased in equity (net assets) from peripheral or incidental transactions of an entity except these that results from expenses or distributions to owner? (c) In 2012, the company wrote off $1,000,000 of inventory that was considered obsolete. Answer: Expenses - Outflows or other using-up of assets or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations. (d) An income tax refund related to the 2009 tax year was received. Answer: Revenues- Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity[s ongoing major or central operations. (e) In 2009, a supply warehouse with an expected useful life of 7 years was erroneously expensed. Answer: Gains- Increase to equity (net assets) from peripheral or incidental transaction of an entity except those that result from revenues or investments by owners. (f) Boleyn, Inc. changed from weighted -average to FIFO inventory pricing. Answer: Revenues- Inflows or other enhancements of assets of an entity or settlements of its liabilities during a period from delivering or producing goods, rendering services, or other activities that constitute the entity[s ongoing major or central operations. Question: E 4-4-(Multiple -Step and Single-Step) Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single- step format. The discussion involves the following 2012 information related to Webster Company ($000 omitted). Administrative expense Officer's salaries $4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 63,570 Rent revenue 17,230 Selling expense Transportation -out 2,690 Sales commission 7,980 Depreciation of sales equipment 6,480 Sales revenue 96,500 Income tax expense 7,580 Interest expense 1,860 Instructions: (a) Prepare an income statement for the year 2012 using the multiple-step form. Common shares out-standing for 2012 total 40,550 ($000 omitted). (b) Prepare an income statement for the year 2012 using the single- step form. (c) Which one do you prefer? Discuss. Answer: (a) Multiple -Step Form Webster Company Income Statement For the Year Ended December 31, 2012 Sales Revenue Cost of goods sold Gross profit $ 96,500 63,570 32,930 Operating Expenses Selling expenses Sales commissions Depreciation of sales equipment Transportation - out Administrative expenses Officers, salaries Depreciation of office furniture and Equipment Income from operations 6,920 $ 7,980 6,480 2,690 $17,150 4,900 3,960 8,860 26,010 Other Revenues and Gains Rent revenue 17,230 Other Expenses and Losses Interest expense 1,860 Income before income tax 22,290 Income tax 7,580 Net income 14,710 Earnings per share ($14,710/40,550) $.36 (b) Single -Step Form Webster Company Income Statement $ For the year ended December 31, 2012 Revenues Sales revenue Rental revenue Total revenue Expenses Cost of goods sold Selling expenses Administrative expenses Interest expenses Total expense Income before Income tax Income tax Net income Earnings per share ($14,710/40,550) $96,500 17,230 113,730 63,570 17,150 8,860 1,860 91,440 22,290 7,580 $ 14,710 $.36 (c) I would use the Multiple- step because it provides more information and a better understanding of the Income statement. Question: E4-15-(Comprehensive Income) Brant, Co. reports the following information for 2012: sales revenue $750,000; cost of goods sold $500,000; operating expenses$80,000; and an unrealized holding loss on available -for -sale securities for 2012 of $50,000. It declared and paid a cash dividend of $10,000 in 2012. Bryant Co. has January 1, 2012, balances in common stock $350,000; accumulated other comprehensive income $80,000; and retained earnings $90,000. It issued no stock during 2012 Instructions Prepare a statement of stockholders' equity. Answer: Bryant Co, Statement of Stockholders Equity Income Statement Sales $750,000 Cost of goods sold $ 500,000 Gross profit $ 250,000 Operating expenses $ 80,000 Income from operation $ 170,000 Other income and losses Unrealized holding loss $ (50,000) Other income $ 80,000 Net Income $ 200,000 Bryant Co, Statement of Stockholders Equity Comprehensive Income Items Total Comprehensive Retained Accumulated other Common Income Earnings Comprehensive Stock Beginning Balance 560,000 350,000 Comprehensive Income Net Income 170,000 170,000 Other Comprehensive Income Unrealized holding gain, net of tax 50,000 50,000 Comprehensive 220,000 Income Ending Balance $760,000 $350,000 110,000 Income 80,000 170,000 50,000 $ 280,000 $130,000 Bryant Co, Statement of Stockholders Equity Balance Sheet Stockholder equity Common stock Retained earning closing Total Stockholders Equity $ 350,000 $ 280,000 $ 630,000 Question: P4-1-(Multiple-Step Income, Retained Earnings) Presented below is information related to Dickinson for 2012. Retained earnings balance, January 1, 2012 $ 980,000 Sales revenue 25,000,000 Cost of goods sold 16,000,000 Interest revenue 70,000 Selling and administrative expenses 4,700,000 Write-off of goodwill 820,000 Income taxes for 2012 1,244,000 Gain on the sale of investments (normal recurring) 110,000 Loss due to flood damage- extraordinary item (net of tax) 390,000 Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 90,000 Dividends declared on common stock 250,000 Dividends declared on preferred stock 80,000 Instructions: Prepare a multiple-step income statement and retained earnings statement. Dickinson Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operation to Rogers Company. During 2012, there were 500,000 shares of common stock outstanding all year. Answer: Dickinson Company Multi-Step Income Statement For Year 2012 Revenues: Sale revenues Less: Cost of goods sold Gross Profit $ $ $ Expenses: Selling and administrative expenses Income from operation Other Revenue and expenses: Interest revenue Write- off of goodwill Gains on sales of investment Total other revenues and expenses Income before income taxes Income tax expense 25,000 16,000 9,000 $ 4,700,000 $ 4,300,000 $ 70,000 $ (820,000) $ 110,000 Income from continuing operation Discontinued operation: Loss on disposition of Wholesale division $ 440,000 Loss on operation of Wholesale division $ 90,000 Total Discontinue operation Income before extraordinary items Loss due to flood damages extra ordinary item Net Income Dickson Company Statement of retained earnings $ (640,000) $ 3,660,000 $ (1,244,000) $ (530,000) $ 1,886,000 $ (390,000) $ 1,496,000 For Year 2012 Retained earnings beginning balance Add: Net Income Less: Dividends Retained earnings at the end of year 980,000 $ 1,416,000 $ (250,000) $ 2,146,000 Net income Less: Dividends on preferred stock Net income for Common Stockholder $ 1,496,000 $ (80,000) $ 1,416,000 $ Question: P4-2 (Single-Step Income), Retained Earnings, Periodic Inventory) Presented below is the trial balance of Thompson Corporation at December 31, 2012. Thompson Corporation Trial Balance December 31, 2012 Debits Purchase Discounts Cash Accounts Receivable Rent Revenue Retained Earnings Salaries and Wages Payable Sales Revenue Notes Receivable Accounts Payable Accumulated Depreciation- Equipment Sales Discounts Sales Returns and Allowance Notes Payable Selling Expenses Administrative Expenses Common Stock Income Tax Expense Cash Dividends Allowance for Doubtful Accounts Supplies Freight -in Land Equipment Bonds Payable Gains on Sale of Land Accumulated Depreciation- Building Inventory Buildings Purchases Credits $10,000 $ 189,700 105,000 18,000 160,000 18,000 1,100,000 110,000 49,000 28,000 14,500 17,500 70,000 232,000 99,000 300,000 53,900 45,000 5,000 14,000 20,000 70,000 140,000 100,000 30,000 19,600 89,000 98,000 610,000 Totals $ 1,907,600 $ 1,907,600 A physical count of inventory on December 31 resulted in an inventory amount of $64,000; thus, cost of goods sold for 2012 is $645,000. Instructions: Prepare a single-step income statement and a retained earnings statement. Assume that the only changes in retained earnings during the current year were from net income and dividends. Thirty thousand shares of common stock were outstanding the entire year
