p29 - Test Bank for Intermediate Accounting, Twelfth...

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Test Bank for Intermediate Accounting, Twelfth Edition 4 - 28 PROBLEMS Pr. 4-96 —Multiple-step income statement. Presented below is information related to Holt Company. Retained earnings, December 31, 2006 $ 650,000 Sales 1,400,000 Selling and administrative expenses 240,000 Hurricane loss (pre-tax) on plant (extraordinary item) 290,000 Cash dividends declared on common stock 33,600 Cost of goods sold 780,000 Gain resulting from computation error on depreciation charge in 2005 (pre-tax) 520,000 Other revenue 120,000 Other expenses 100,000 Instructions Prepare in good form a multiple-step income statement for the year 2007. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Solution 4-96 Holt Company INCOME STATEMENT For the Year Ended December 31, 2007 Sales $1,400,000 Cost of goods sold 780,000 Gross profit 620,000 Selling and administrative expenses 240,000 Income from operations 380,000 Other revenue 120,000 Other expenses (100,000 ) Income before taxes 400,000 Income taxes (120,000 ) Income before extraordinary item 280,000 Extraordinary loss, net of applicable income taxes of $87,000 (203,000 ) Net income $ 77,000 Per share of common stock—
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p29 - Test Bank for Intermediate Accounting, Twelfth...

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