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Unformatted text preview: P4-3(A)Charyk Inc.Income StatementDecember 31, 2008Continuing Operations$1,790,000Operating Expense(4,000)Operating Income1,786,000Other expenses & losses(107,000)Income before income tax1,679,000Income Tax (40%)(671,600)Income before discontinued operations and $1,007,400Extraordinary itemLoss from discontinued operations (net of tax)(69,000)Income before extraordinary item$938,400Extraordinary loss (Insured Flood)(80,000)Income before extraordinary item$858,400Extraordinary gain (Insurance Policy)46,000Net Income$904,400Net Income per common share$9.11(B)Charyk Inc.Retained Earnings StatementDecember 31, 2008Balance- January 1,2,540,000Correction for understated income in prior period40,000Less: Tax (40%)(16,000)Balance January 1, as adjusted2,564,000Add: Net Income904,400Balance, December 31$3,468,400(C)GAAP Classification rules assist in the assessment of the quality of earnings because it emphasises the importance that the information is unbiased, reflects reality, and is transparent and understandable. With these guidelines the income statement and retained earnings statement include information that reflects the underlying business fundamentals and the sustainability of the earnings in a clear and concise manner. With all this in mind it allows stakeholder to make educated decisions based on past and present information....
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This note was uploaded on 11/16/2011 for the course ACCT 3201 taught by Professor Jobs during the Spring '09 term at Kwantlen Polytechnic University.
- Spring '09