3101 Homework Solutions ch.04

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

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Unformatted text preview: 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 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: Income from continuing operations........................ $5.15*$5....
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This note was uploaded on 04/29/2011 for the course ACCT 3001 taught by Professor Erickson during the Spring '10 term at University of Minnesota Duluth.

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

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