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3101 Homework Solutions ch.04

# 3101 Homework Solutions ch.04 - Acct 3101 Intermed Acctg 1...

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Acct 3101 Intermed. Acctg 1 Homework Solutions Text: Kieso et al. 13 th ed. Chapter 4 EXERCISE 4-11 (a) McENTIRE CORPORATION Retained Earnings Statement For the Year Ended December 31, 2010 Balance, January 1, as reported ............................................... \$225,000* Correction for depreciation error (net of \$10,000 tax) .......... (15,000) Cumulative decrease in income from change in inventory methods (net of \$18,000 tax) ............................ (27,000 ) Balance, January 1, as adjusted ............................................... 183,000 Add: Net income ..................................................................... 132,000 ** 315,000 Less: Dividends declared ......................................................... 100,000 Balance, December 31 ............................................................... \$215,000 * (\$40,000 + \$125,000 + \$160,000) – (\$50,000 + \$50,000) ** [\$220,000 – (40% X \$220,000)] (b) Total retained earnings would still be reported as \$215,000. A restriction does not affect total retained earnings; it merely labels part of the retained earnings as being unavailable for dividend distribution. Retained earnings would be reported as follows: Retained earnings: File: 3101 homework solutions ch.04 Page 1

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Appropriated ............................................................. \$ 70,000 Unappropriated ......................................................... 145,000 Total ...................................................................... \$215,000 PROBLEM 4-3 MAHER INC. Income Statement (Partial) For the Year Ended December 31, 2010 Income from continuing operations before income tax ...................................................... \$838,500 (a) Income tax ................................................................. 220,350 (b) Income from continuing operations .................................... 618,150 Discontinued operations Loss from disposal of recreational division ............ \$115,000 Less: Applicable income tax reduction .................. 34,500 80,500 Income before extraordinary item ...................................... 537,650 Extraordinary item: Major casualty loss ................................................... 90,000 Less: Applicable income tax reduction .................. 41,400 48,600 Net income ............................................................................. \$489,050 File: 3101 homework solutions ch.04 Page 2
Per share of common stock:

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