Homework Session 11 Spring 2010

# Homework Session 11 Spring 2010 - Homework Session 11...

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Homework Session 11 Spring 2010 P6–3. Income Statement Items Case A Case B Gross sales revenue \$239,000 \$165,000 Sales returns and allowances 20,000 i. 40,500 Net sales revenue a. 219,000 g. 124,500 Cost of goods sold c. 153,300 h. (70%) 87,150 Gross profit b. (30%) 65,700 f. 37,350 Operating expenses d. 43,700 18,600 Pretax income 22,000 d. 18,750 Income tax expense (20%) e. 4,400 e. 3,750 Income before extraordinary items f. 17,600 c. 15,000 Extraordinary gain (loss) (2,000) 10,000 Less: Income tax (20%) g. 400 b. (2,000) Net income h. \$16,000 a. \$23,000 EPS (10,000 shares) i. \$1.60 \$2.30 Note = Computations in order CASE A a. \$239,000 – \$20,000 = \$219,000 b. \$219,000 x .30 = \$65,700 c. \$219,000 – \$65,700 = \$153,300 d. \$65,700 – \$22,000 = \$43,700 e. \$22,000 x .20 = \$4,400 f. \$22,000 – \$4,400 = \$17,600 g. \$2,000 x .20 = \$400 h. \$17,600 - \$2,000 + \$400 = \$16,000 i. \$16,000 ÷ 10,000 = \$1.60 CASE B a. \$2.30 x 10,000 shares = \$23,000 b. \$10,000 x .20 = \$2,000 c. \$23,000 - \$10,000 + \$2,000 = \$15,000 d. \$15,000 ÷ .80 = \$18,750 e. \$18,750 - \$15,000 = \$3,750 f. \$18,750 + \$18,600 = \$37,350 g. \$37,350 ÷ (1 - .70) = \$124,500 h. \$124,500 - \$37,350 = \$87,150 i. \$165,000 - \$124,500 = \$40,500

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1. Bad debt expense (+E, –SE). ..................................................... 162 Allowance for doubtful accounts (+XA, –A). .................... 162 End-of-period bad debt expense estimate. Allowance for doubtful accounts (–XA, +A). ............................... 145 Accounts receivable (–A). ................................................ 145 Write-off of bad debts. 2. Year 2. ....................................... \$69 + \$30 – \$41 = \$58 Year 1. ....................................... \$61 + \$23 – \$15 = \$69 Allowance for DA Year 2 Allowance for DA Year 1 69 Beg. bal. 61 Beg. bal Write-offs 41 30
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## This note was uploaded on 04/25/2010 for the course HADM 1121 taught by Professor Dittman during the Spring '07 term at Cornell.

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Homework Session 11 Spring 2010 - Homework Session 11...

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