Question
Problem 4-12 (Part Level Submission) Joe Schreiner, controller for Ayayai Company Inc., recently prepared the companys income statement and statement of changes in equity for
Problem 4-12 (Part Level Submission)
Joe Schreiner, controller for Ayayai Company Inc., recently prepared the companys income statement and statement of changes in equity for 2017. Schreiner believes that the statements are a fair presentation of the companys financial progress during the current period, but he also admits that he has not examined any recent professional pronouncements on accounting.
| AYAYAI COMPANY INC. Income Statement For the Year Ended December 31, 2017 | ||||||||||
| Sales revenues | $ | 350,000 | ||||||||
| Less: Sales returns and allowances | 15,000 | |||||||||
| Net sales revenue | 335,000 | |||||||||
| Cost of goods sold: | ||||||||||
| Inventory, January 1, 2017 | $ | 48,000 | ||||||||
| Purchases | $ | 186,000 | ||||||||
| Less: Purchase discounts | 2,500 | 183,500 | ||||||||
| Cost of goods available for sale | 231,500 | |||||||||
| Inventory, December 31, 2017 | 40,000 | |||||||||
| Cost of goods sold | 191,500 | |||||||||
| Gross profit | 143,500 | |||||||||
| Selling expenses | 39,000 | |||||||||
| Administrative expenses | 30,000 | 69,000 | ||||||||
| Income before income tax | 74,500 | |||||||||
| Other revenues and gains | ||||||||||
| Unrealized gain on FV-OCI investments | 33,000 | |||||||||
| Dividends received | 37,000 | |||||||||
| 144,500 | ||||||||||
| Income tax | 43,350 | |||||||||
| Net income | $ | 101,150 | ||||||||
| AYAYAI COMPANY INC. Excerpt from Statement of Changes in Equity For the Year Ended December 31, 2017 | |||||||||||
| Retained earnings, January 1, 2017 | $ | 210,000 | |||||||||
| Add: | |||||||||||
| Net income for 2017 | $ | 101,150 | |||||||||
| Gain from sale of long-term investments | 29,400 | $ | 130,550 | ||||||||
| Deduct: | |||||||||||
| Loss on expropriation | 11,000 | ||||||||||
| Correction of mathematical error (net of tax) | 14,000 | (25,000 | ) | 105,550 | |||||||
| Retained earnings, December 31, 2017 | $ | 315,550 | |||||||||
Assume that Ayayai Company follows IFRS, and has a tax rate of 30%. Assume that investments are accounted for as FV-OCI investments with gains/losses recycled through net income. Prepare a statement of comprehensive income showing expenses by function. Ignore calculation of EPS. (Round answers to 0 decimal places, e.g. 5,275. Round tax rate to 4 decimal places, e.g. 52.7525%.)
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Sawyer's Internal Auditing The Practice Of Modern Internal Auditing
Authors: Lawrence Sawyer, Mortimer Dittenhofer, James Scheiner
5th Edition
0894131788, 978-0894131783
