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Unformatted text preview: P5-9 Name: 1. Prepare a multiple-step format income statement by filling in the line items and amounts in the shaded cells. An asterisk (*) will appear next to an incorrect amount in specific cells. OLSEN COMPANY Income Statement For Year Ended December 31, 2010 Sales (net) $196,000 Cost of goods sold (120,100) Gross profit $75,900 Operating expenses Selling expenses $19,600 Administrative expenses 16,800 Total operating expenses (36,400) Operating Income $39,500 Other items Add: Interest Revenue $2,300 Add: Gain on Sale of equipment 3,200 Interest expense (3,400) 2,100 Pretax income from continuing operations 41,600 Less: income tax on income from continuing operations (12,480) Income from continuing operations $29,120 Results from discontinued operations Loss from operations of discotinued Division L (net of $900 incme tax credit) ($2,100) Gain on sale of Division L (net of $1,350 income taxes) 3,150 1,050 Income before extraordinary items $30,170 Extraordinary loss because of earthquake (net of $1,800 income tax credit) (4,200) Net income $25,970 Components of Income Income from continuing operations Results from discontinued operations Extraordinary loss due to earthquake Net Income Earnings per common share (8,000 shares) $3.64 0.13 (0.52) $3.25 2. Prepare a retained earnings statement by filling in the line items and amounts in the shaded cells. An asterisk (*) will appear next to an incorrect amount in the specific cells. OLSEN COMPANY Statement of Retained Earnings For Year Ended December 31, 2010 Retained Earnings, January 1, 2010 Correction of overstatement in last years income because of error (net of $1,650 income tax credit Add: Net income Less: Cash dividends ($.50 per share for 8,000 common shares) Retained earnings, December 31, 2010 $59,300 (3,850) 25,970 $81,420 (4,000) $77,420 ...
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