Toshiro group Inc is a fast growing global conglomerate. He has hired some bright graduates from EU to help him modernise the company. He must close his consolidated accounts for December 2019 and do some planning for 2020 so all this can be presented to the board. You have been recruited as a consultant by the CEO at the head office to help him. You are recent graduate from EU Business School. Your first assignment is to help the various finance heads and provide all details in a report. The CEO, Toshiro is very busy and fully expects you to help him get through this busy period and show your deep insights about finance and accounting.

ANNEX 1 - The CEO's questions.

1. QUESTION 1: The income statement below was prepared by a new and inexperienced employee in the accounting department of Toshiro Space Ltd a new California based business venture in the group:

 

a) Make corrected income statement for the year ended December 31, 2019, include at the bottom of your income statement all appropriate earnings per share figures. Assume that throughout the year the company had outstanding a weighted average of 100,000 shares of a single class of capital stock of par value $1.

b) Make a statement of retained earnings for 2019. (As originally reported, retained earnings at December 31, 2018, amount to $2,000,000.)

TOSHIRO SPACE LTD Income Statement For the Year Ended December 31, 2019 Net sales. Gain on sale of treasury stock Excess of issuance price over par value of capital stock... Prior period adjustment (net of income taxes). Extraordinary gain (net of income taxes). $9,800,000 47,000 640,000 90,000 50,000 Total revenue $10,627,000 Less: Cost of goods sold. Selling expenses.. General and administrative expenses. Loss from settlement of litigation.... Income taxes on continuing operations.. $5,000,000 1,310,000 942,000 12,000 810,000 Operating loss on discontinued operations (net of income tax benefit). Loss on disposal of discontinued operations (net of income tax benefit). Cumulative effect of change in accounting principle (net of income tax benefit).. Dividends declared on capital stock. Total costs and expenses... 170,000 390,000 92,000 400,000 9,126,000 Net income.. $1,501,000