Homeworksolution-ch.4

Homeworksolution-ch.4 - BRIEF EXERCISE 4-4 Income from...

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BRIEF EXERCISE 4-4 Income from continuing operations $12,600,000 Discontinued operations Loss from operation of discontinued restaurant division (net of tax) $315,000 Loss from disposal of restaurant division (net of tax) 89,000 404,000 Net income $12,196,000 Earnings per share: Income from continuing operations $1.26 Discontinued operations (.04 ) Net income $1.22 BRIEF EXERCISE 4-5 Income before income tax and extraordinary item $7,300,000 Income tax 2,190,000 Income before extraordinary item 5,110,000 Extraordinary loss from casualty, net of $381,000 in taxes 889,000 Net income $4,221,000 Earnings per share: Income before extraordinary item $1.02 Extraordinary loss (.18 ) Net income $ .84
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BRIEF EXERCISE 4-6 In order to qualify for separate presentation as discontinued operations on the income statement, the restaurants must be a component of the entity where the operations, cash flows, and financial elements are clearly distinguishable from the rest of the company. A key element is that the group of assets generates its own net cash flows and is operationally distinct. Selling the corporate owned stores to franchisees would qualify for discontinued operations treatment. The stores generate their own cash flows and are operationally distinct from the franchised restaurants. BRIEF EXERCISE 4-10 Global Corporation Retained Earnings Statement For the Year Ended December 31, 2008 Balance, January 1 $ 529,000 Add: Net income 1,646,000 2,175,000 Deduct: Dividends declared 660,000 Balance, December 31 $1,515,000
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BRIEF EXERCISE 4-11 Global Corporation Retained Earnings Statement For the Year Ended December 31, 2008 Balance, January 1, as reported $ 529,000 Correction for amortization error (net of tax) 25,000 Balance, January 1, as adjusted 554,000 Add: Net income 1,646,000 2,200,000 Less: Dividends declared 660,000 Balance, December 31 $1,540,000
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EXERCISE 4-8 (30-35 minutes) Voisine Corp. Income Statement For the Year Ended December 31, 2008 Sales Revenue Sales $1,380,000 Less: Sales returns and allowances $150,000 Sales discounts 45,000 195,000 Net sales revenue 1,185,000 Cost of goods sold 621,000 Gross profit on sales 564,000 Operating Expenses Selling expenses 194,000 Administrative and general expenses 97,000 291,000 Income from operations 273,000 Other Revenue and Gains Interest revenue 86,000 359,000 Other Expenses and Losses Interest expense 60,000 Income before taxes and extraordinary item 299,000 Income taxes 131,560 Income before extraordinary item 167,440 Extraordinary item Loss from earthquake damage 150,000 Less applicable tax reduction 66,000 84,000 Net income $ 83,440 Earnings per share: Income before extraordinary item $0.84 Extraordinary item (0.42 ) Net income $0.42
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EXERCISE 4-12 (20-25 minutes) (a) The income statement and related footnote are as follows: Income from continuing operations before income taxes $144,000 Income taxes 43,200 Income from continuing operations 100,800 Discontinued operations (Note XX) Income from operations of the discontinued
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This note was uploaded on 10/18/2010 for the course BUS ACC415 taught by Professor Bibijohn during the Spring '09 term at Seneca.

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Homeworksolution-ch.4 - BRIEF EXERCISE 4-4 Income from...

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