225ch2solutions - E 227(LO2 1 Income Statement Preparation...

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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.
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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
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