Take Home Quiz One - Name_ Take Home Quiz One Fall 2009...

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Name_________________ Take Home Quiz One Fall 2009 Problem 1 (2 points) Shown below is an income statement for 2008 that was prepared by a poorly trained bookkeeper of Sanctuary Corporation. Sanctuary Corporation INCOME STATEMENT December 31, 2008 Sales revenue $1,500,000 Investment revenue 22,750 Cost of goods sold (730,000) Rent Expense (155,000) Salaries expense (215,000) Interest expense (12,500) Insurance expense (27,500) Supplies expense (15,000) Selling expense (130,000) Depreciation expense (80,000) Income before income taxes 157,750 Special items Major casualty loss (extraordinary item) (75,000) Cumulative effect of change in accounting principle 175,000 Net federal income tax liability (97,945 ) Net income $ 159,805 In addition to the above information, the bookkeeper failed to consider the following issues: 1. In December, the bookkeeper discovered that depreciation in the amount of $50,000 (pre- tax) on a piece of equipment had not been recorded in 2001. 2. At the end of December, the bookkeeper found out that a component of the business had been sold. From January through December, the component had incurred an operating loss of $125,000. The sale was made at a loss of $50,000. 3.
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This note was uploaded on 12/25/2009 for the course ACC 5100 taught by Professor Andrews during the Spring '09 term at Wayne State University.

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Take Home Quiz One - Name_ Take Home Quiz One Fall 2009...

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