225ch2solutions

225ch2solutions - E 2–27 (LO2) Income Statement...

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Unformatted text preview: E 2–27 (LO2) Income Statement Preparation 1. Pickard and Associates Income Statement For the Year Ended December 31, 2009 Fees (revenues).............................................................. $476,000 Expenses: Advertising expense ............................................... $14,500 Supplies expense..................................................... 31,500 Rent expense............................................................ 12,000 Utilities expense....................................................... 2,500 Miscellaneous expense............................................ 5,100 Salaries expense....................................................... 78,000 143,600 Income before taxes...................................................... $332,400 Income taxes (30%)........................................................ 99,720 Net income...................................................................... $ 232,680 Earnings per share ($232,680/11,000 shares)............. $ 21.15 2. EPS tells the reader that for every individual share of stock outstanding, Pickard and Associates earned $21.15 during 2009. This helps investors see how profitable their individual investments in Pickard and Associates are. E 2–30 (LO2) Preparation of Income Statement and Retained Earnings Statement Big Sky Corporation Income Statement For the Year Ended June 30, 2009 Ski rental revenue....................................................... $77,900 Expenses: Rent expense.......................................................... $ 6,000 Salaries expense.................................................... 38,600 Utilities expense..................................................... 2,400 Advertising expense.............................................. 7,500 Miscellaneous expense......................................... 7,700 62,200 Income before taxes.................................................... $15,700 Income taxes................................................................ 2,100 Net income................................................................... $13,600 Earnings per share ($13,600/1,500 shares).............. $ 9.07 (rounded) Big Sky Corporation Statement of Retained Earnings For the Year Ended June 30, 2009 Retained earnings, July 1, 2008.....................................................................
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This note was uploaded on 04/29/2008 for the course ACCT 225 taught by Professor Canace during the Spring '08 term at South Carolina.

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225ch2solutions - E 2–27 (LO2) Income Statement...

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