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homework%20solutions%20chapters%205a - E5-5 1 GOLD COMPANY...

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E5-5 1. GOLD COMPANY Income Statement For Year Ended December 31, 2007   Sales  $200,000 Less:  Sales returns and allowances      (5,000 ) Net sales $195,000 Cost of goods sold  (101,000 ) Gross profit $  94,000 Operating expenses Selling expenses  $28,000 General and administrative expenses    20,000 Total operating expenses    (48,000 ) Operating income $  46,000 Other items Interest revenue  $  4,000 Loss from strike     (9,000 )      (5,000 ) Income before income tax and extraordinary items $  41,000 Income tax expense    (12,300 ) Income before extraordinary items $  28,700 Extraordinary loss (net of $5,100  income tax credit)    (11,900 ) Net Income $  16,800 Earnings per Common Share Components of Income     (7,000 common shares)               Income before extraordinary items $4.10 Extraordinary loss  (1.70 ) Net income $2.40
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E5-5  (continued) 2. GOLD COMPANY Income Statement For Year Ended December 31, 2007 Revenues Sales (net of $5,000 returns and allowances) $195,000 Interest revenue       4,000 Total revenues $199,000 Expenses Cost of goods sold $101,000 Selling expenses     28,000 General and administrative expenses     20,000 Loss from strike       9,000 Income tax expense*     12,300 Total expenses  (170,300 ) Income before extraordinary items $  28,700 Extraordinary loss (net of $5,100  income tax credit)    (11,900 ) Net Income $  16,800 Earnings per Common Share Components of Income     (7,000 common shares)               Income before extraordinary items $4.10 Extraordinary loss  (1.70 ) Net income $2.40 *Note to Instructor :  $12,300 = 30% x $41,000 ($199,000 - $101,000 -      $28,000 - $20,000 - $9,000)
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E5-6 1. ADANDT COMPANY Income Statement For Year Ended December 31, 2007   Sales  $163,000 Less:  Sales returns and allowances      (3,000 ) Net sales $160,000 Cost of goods sold    (95,000 ) Gross profit $  65,000 Operating expenses Selling expenses  $14,000 General and administrative expenses    17,000 Total operating expenses    (31,000 ) Operating income $  34,000 Other items Interest revenue  $  2,500 Loss on sale of equipment     (2,000 )          500   Income before income tax and extraordinary items $  34,500 Income tax expense    (10,350 ) Income before extraordinary items $  24,150 Extraordinary loss (net of $2,400  income tax credit)      (5,600 ) Net Income $  18,550 Earnings per Common Share Components of Income     (7,000 common shares)               Income before extraordinary items $3.45 Extraordinary loss  (0.80 ) Net income $2.65
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E5-6  (continued) 2. ADANDT COMPANY Income Statement For Year Ended December 31, 2007 Revenues Sales (net of $3,000 returns and allowances) $160,000 Interest revenue       2,500 Total revenues $162,500 Expenses Cost of goods sold $  95,000 Selling expenses     14,000 General and administrative expenses     17,000 Loss on sale of equipment       2,000 Income tax expense     10,350
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