Homework_Cha_4 - Question 1: Score 15/15 Your response E...

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Question 1: Score 15/15
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Your response E 4-3 Income statement format; single step and multiple step LO2 LO4 LO6 The following is a partial trial balance for General Lighting Corporation as of December 31, 2006: Account Title Debits Credits Sales revenue 2,255,00 0 Rental revenue 82,000 Loss on sale of equipment 20,500 Loss from flood damage (event is both unusual and infrequent) 123,000 Cost of goods sold 1,151,77 7 Loss from write-down of inventory due to obsolescence 172,500 Salaries expense 287,872 Depreciation expense 95,957 Interest expense 92,250 Rent expense 47,979 401,000 shares of common stock were outstanding throughout 2006. Income tax expense has not yet been accrued. The income tax rate is 35%. Required: 1. Prepare a single-step income statement for 2006, including EPS disclosures. 2. Prepare a multiple-step income statement for 2006, including EPS disclosures. Round EPS calculations to 2 decimal places and all other answers to the nearest whole dollar. Amounts in parentheses do not require a minus sign. 1. GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2006 Revenues and gains: Sales (2%) Rental revenue Total revenues and gains Expenses and losses: Cost of goods sold (2%) $ 1151777 (2%) Salaries 287872 (2%)
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Question 2: Score 12/12
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Your response P 4-3 Discontinued operations LO5 The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2006 and 2005: 2006 2005 Sales $15,200,000 $9,500,000 Cost of goods sold 9,120,000 5,700,000 Gross profit 6,080,000 3,800,000 Operating expenses 3,200,000 2,600,000 Operating income 2,880,000 1,200,000 Gain on sale of division 450,000 3,330,000 1,200,000 Income tax expense 1,332,000 480,000 Net income $1,998,000 $720,000 On October 15, 2006, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The division was sold on December 31, 2006, for $5,000,000. Book value of the division's assets was $4,550,000. The division's contribution to Jackson's operating income before-tax for each year was as follows: 2006 $400,000 loss 2005 $300,000 loss Assume an income tax rate of 40%. Required: 1. Prepare revised income statements according to generally accepted accounting principles by entering the required information where indicated below. Begin with income from continuing operations before income taxes. Ignore EPS disclosures. 2. Assume that by December 31, 2006, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,150,000. How would the presentation of discontinued operations be different from your answer to requirement 1? 3.
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This note was uploaded on 11/28/2009 for the course BUSINESS acct 3211 taught by Professor Lin during the Winter '09 term at Calhoun Community College.

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Homework_Cha_4 - Question 1: Score 15/15 Your response E...

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