The following data were taken from the records of Skate N’ Ski Corporation for the year ended
October 31, 2006:
Income statement data:
Administrative expenses .........................$ 100,000
Cost of merchandise sold ..........................732,000
Gain on condemnation of land ..........................60,000
Income tax:
Applicable to continuing operations ......................206,000
Applicable to loss from discontinued operations ...................28,800
Applicable to gain on condemnation of land ...................24,000
Interest expense ................................8,000
Interest revenue ................................5,000
Loss from discontinued operations ......................76,800
Loss from fixed asset impairment ......................200,000
Restructuring charge . ...........................90,000
Sales ..................................2,020,000
Selling expenses ...............................400,000
Retained earnings and balance sheet data:
Accounts payable ............................$ 89,500
Accounts receivable ............................309,050
Accumulated depreciation ........................3,050,000
Accumulated other comprehensive loss .....................24,000
Allowance for doubtful accounts .........................21,500
Cash ...................................145,500
Common stock, $15 par (400,000 shares authorized; 152,000 shares issued) ......2,280,000
Deferred income taxes payable (current portion, $4,700) ...............25,700
Dividends:
Cash dividends for common stock .......................40,000
Cash dividends for preferred stock .......................100,000
Stock dividends for common stock ......................60,000
Dividends payable ..............................30,000
Employee termination benefit obligation (current) ................60,000
Equipment ...............................9,541,050
Income tax payable ............................55,900
Interest receivable .............................2,500
Merchandise inventory (October 31, 2006), at lower of cost (FIFO) or market .....425,000
Notes receivable ..............................77,500
Paid-in capital from sale of Treasury stock ...................16,000
Paid-in capital in excess of par—common stock .................894,750
Paid-in capital in excess of par—preferred stock .................240,000
Patents .................................$ 55,000
Preferred 6 2/3% stock, $100 par (30,000 shares authorized; 15,000 shares issued) ..1,500,000
Prepaid expenses ..............................15,900
Retained earnings, November 1, 2005 ......................2,446,150
Temporary investment in marketable equity securities ...............145,000
Treasury stock (2,000 shares of common stock at cost of $35 per share) ..........70,000
Unrealized loss (net of tax) on temporary equity securities .............24,000
Instructions
1. Prepare a multiple-step income statement for the year ended October 31, 2006, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 150,000 and preferred dividends were $100,000. Assume that the gain on condemnation of land is an extraordinary item.
2. Prepare a retained earnings statement for the year ended October 31, 2006.
3. Prepare a balance sheet in report form as of October 31, 2006.