Question-1
Presented below are changes in all the account balances of Sunland Furniture Co. during the current year, except for retained earnings.
| Increase (Decrease) | Increase (Decrease) | ||
| Cash | $70,220 | Accounts Payable | $(53,000) |
| Accounts Receivable (net) | 50,700 | Bonds Payable | 83,800 |
| Inventory | 135,200 | Common Stock | 125,600 |
| Investments | (48,240) | Paid-In Capital in Excess of Par—Common Stock | 14,220 |
Question-2
Presented below is information related to Marigold Company at December 31, 2020, the end of its first year of operations.
| Sales revenue | $308,620 |
| Cost of goods sold | 146,950 |
| Selling and administrative expenses | 49,300 |
| Gain on sale of plant assets | 29,000 |
| Unrealized gain on available-for-sale debt investments | 9,620 |
| Interest expense | 5,960 |
| Loss on discontinued operations | 11,960 |
| Dividends declared and paid | 4,550 |
Compute the following:
(a) Income from operations
(b) Net income
(c) Comprehensive income
(d) Retained earnings balance at December 31, 2020
Question-3
Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to Waterway Company ($000 omitted).
| Administrative expense | |
| Officers’ salaries | $4,972 |
| Depreciation of office furniture and equipment | 4,032 |
| Cost of goods sold | 60,642 |
| Rent revenue | 17,302 |
| Selling expense | |
| Delivery expense | 2,762 |
| Sales commissions | 8,052 |
| Depreciation of sales equipment | 6,552 |
| Sales revenue | 96,572 |
| Income tax | 9,142 |
| Interest expense | 1,932 |
Common shares outstanding for 2020 total 31,576 (000 omitted).
- Prepare an income statement for the year 2020 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)
- Prepare an income statement for the year 2020 using the single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)
Question-4
The stockholders’ equity section of Coronado Corporation appears below as of December 31, 2020.
| 8% preferred stock, $50 par value, authorized | ||
| 101,800 shares, outstanding 91,800 shares | $4,590,000 | |
| Common stock, $1.00 par, authorized and issued 10,200,000 shares | 10,200,000 | |
| Additional paid-in capital | 20,910,000 | |
| Retained earnings | $136,680,000 | |
| Net income | 33,660,000 | 170,340,000 |
| $206,040,000 |
Net income for 2020 reflects a total effective tax rate of 20%. Included in the net income figure is a loss of $18,360,000 (before tax) as a result of a non-recurring major casualty. Preferred stock dividends of $367,200 were declared and paid in 2020. Dividends of $1,020,000 were declared and paid to common stockholders in 2020.
Compute earnings per share data as it should appear on the income statement of Coronado Corporation. (Round answers to 2 decimal places, e.g. 1.48.)
Question-5
- Coronado Corporation reported the following for 2020: net sales $1,220,300, cost of goods sold $729,000, selling and administrative expenses $331,600, and an unrealized holding gain on available-for-sale debt securities $16,300.
- Prepare a statement of comprehensive income using the one statement format. (Ignore income taxes and earnings per share.)