Using the information given create the income statement for Pucket Corporation

156 SU 4: income Statement Items Income Statement Authoritative Literature Help Pucket Corp. is in the process of preparing closing the books, it prepared the following: statemenits for closing the books, it prepered the frg its financial statements for the year ended December 31, Year 4. Before Condensed Trial Balance December 31, Year 4 Credit Debit $ 7,082,500 Total assets Total liabilities Common stock Additional paid-in capital Donated capital Retained eanings, 1/1Year 4 Net sales Cost of sales $ 1,700,000 1,250,000 2,097,500 90,000 1,650,000 6,250,000 3,750,000 1,212,500 122,500 Selling and administrative expenses Interest expense Gain on sale of long-term investments Income tax expense Loss on disposition of plant assets Loss due to earthquake damage 130,000 300,000 225,000 475,000 13,167,50 $13,167 Other financial data for the year ended December 31, Year 4: Sales retums and allowances equaled $215,000, and sales discounts taken were $95,000 Estimated federal income tax payments were $200,000, and accrued federal income taxes equaled $100,000. The total charged to income tax expense does not properly reflect current or deferred income tax expense or interperiod income tax allocation for income statement purposes. The enacted tax rate on all types of taxable income for the current and future years is 30%-The altemative minimum tax is less than the regular income tax. interest expense includes 6% interest on 20-year bonds issued at their face amount of $1,500,000. A $90,000 excess of carrying amount over tax basis in depreciable assets arose from receipt of a contribution . of equipment by a local government on December 31, Year 4. It is expected to be depreciated over 5 years beginning in Year 5There were no temporary differences prior to Year 5 Officers' life insurance expense (not tax deductible) is $70,000. The earthquake damage is considered unusual and infrequent, but the disposition of plant assets is considered infrequent but not unusual. Moreover, the disposition of plant assets was not a disposal of a component of an entity. The shares of common stock ($5 par) traded on a national exchange . 200,000 20,000 30,000 250,000 Outstanding at 1/1Year 4 issued on 3/30/Year 4 as a 10% stock dividend Issued shares for $25 per sharp on 6/30/Year4 Outstanding at 12/31/Year 4 Pucket declared a $1.25 common stock dividend on December 28, Year 4. Continued on next page- Scanned with CamScanner SU 4: Income Statement Items 157 Income Statement Authoritative Literature HelpContinued Using the information from the previous page, enter in the shaded cells the correct amounts for Pucket Corporation's Income statement. Pucket Corporation Income Statement For the Year Ended December 31, Year 4 Net sales Cost of sales Gross profit Selling and administrative expenses Income from operations Other revenues and gains: Gain on sale of long-term investments Other expenses and losses: Interest expense Loss on disposition of plant assets income from continuing operations before income tax Income tax expense: Current tax expense Deferred tax expense Income before extraordinary item Extraordinary item-loss from earthquake (net of applicable taxes) Net income 156 SU 4: income Statement Items Income Statement Authoritative Literature Help Pucket Corp. is in the process of preparing closing the books, it prepared the following: statemenits for closing the books, it prepered the frg its financial statements for the year ended December 31, Year 4. Before Condensed Trial Balance December 31, Year 4 Credit Debit $ 7,082,500 Total assets Total liabilities Common stock Additional paid-in capital Donated capital Retained eanings, 1/1Year 4 Net sales Cost of sales $ 1,700,000 1,250,000 2,097,500 90,000 1,650,000 6,250,000 3,750,000 1,212,500 122,500 Selling and administrative expenses Interest expense Gain on sale of long-term investments Income tax expense Loss on disposition of plant assets Loss due to earthquake damage 130,000 300,000 225,000 475,000 13,167,50 $13,167 Other financial data for the year ended December 31, Year 4: Sales retums and allowances equaled $215,000, and sales discounts taken were $95,000 Estimated federal income tax payments were $200,000, and accrued federal income taxes equaled $100,000. The total charged to income tax expense does not properly reflect current or deferred income tax expense or interperiod income tax allocation for income statement purposes. The enacted tax rate on all types of taxable income for the current and future years is 30%-The altemative minimum tax is less than the regular income tax. interest expense includes 6% interest on 20-year bonds issued at their face amount of $1,500,000. A $90,000 excess of carrying amount over tax basis in depreciable assets arose from receipt of a contribution . of equipment by a local government on December 31, Year 4. It is expected to be depreciated over 5 years beginning in Year 5There were no temporary differences prior to Year 5 Officers' life insurance expense (not tax deductible) is $70,000. The earthquake damage is considered unusual and infrequent, but the disposition of plant assets is considered infrequent but not unusual. Moreover, the disposition of plant assets was not a disposal of a component of an entity. The shares of common stock ($5 par) traded on a national exchange . 200,000 20,000 30,000 250,000 Outstanding at 1/1Year 4 issued on 3/30/Year 4 as a 10% stock dividend Issued shares for $25 per sharp on 6/30/Year4 Outstanding at 12/31/Year 4 Pucket declared a $1.25 common stock dividend on December 28, Year 4. Continued on next page- Scanned with CamScanner SU 4: Income Statement Items 157 Income Statement Authoritative Literature HelpContinued Using the information from the previous page, enter in the shaded cells the correct amounts for Pucket Corporation's Income statement. Pucket Corporation Income Statement For the Year Ended December 31, Year 4 Net sales Cost of sales Gross profit Selling and administrative expenses Income from operations Other revenues and gains: Gain on sale of long-term investments Other expenses and losses: Interest expense Loss on disposition of plant assets income from continuing operations before income tax Income tax expense: Current tax expense Deferred tax expense Income before extraordinary item Extraordinary item-loss from earthquake (net of applicable taxes) Net income