The work sheet for Lighting Center, Inc., for the year ended December 31 of the current year and forms for completing this problem are given in the Working Papers. Instructions: 1. Prepare an income statement. Calculate and record the following component percentages: (a) cost of merchandise sold, (b) gross profit on sales, (c) total expenses, and (d) net income or loss before federal income tax. Round percentage calculations to the nearest 0.1%.

2. Prepare a statement of stockholders’ equity. The company had 90,000 shares of $1.00 par value stock outstanding on January

1. The company issued an additional 10,000 shares during the year.

3. Prepare a balance sheet in report form.

4. Calculate the earnings per share and price-earnings ratio. The current market price of the stock is $28.50.

  

 

 

ACCOUNT TITLE Merchandise Inventory Sales Sales Discount Sales Returns and Allowances Purchases Purchases Discount Purch Returns and Allowances Advertising Expense Cash Short and Over Credit Cand Fee Expense Dept. Exp-Office Equipment Depr. Exp-Store Equipment Insurance Expense Miscellaneous Expense Payroll Taxes Expense Rent Expense Salary Expense Supplies Expense-Office Supplies Expense-Store Uncollectible Accounts Expense Utilities Expense Federal Income Tax Expense Net Income after Federal Income Tax TRIAL BALANCE DEBIT CREDIT 49512000 164815 348495 Hobby Shack, Inc. Work Sheet For Year Ended December 31, 20 ADJUSTMENTS DEDIT CREDIT 1584000 14048000 25848 312728 20996000 360ppo 1925 338500 654000 525000 317000 256490 910spo 1800000 10452500 273000 1000 124500 382000 588924 1800000 67085159 67086159 4357424 435742 10 INCOME STATEMENT OCRIT 25848 312728 20996000 360000 1925 338500 654000 525000 317000 256490 910500 1800000 10452500 273000 291000 124500 382000 2388924 41993915 500253 10 26984668 18953273 8031395 8031395 s 50025310 50025310 26984668 26984668 CREDIT 49512000 164815 348495 BALANCE SHEET CREDIT DEBIT 12464000 229=E === R