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Problem+4-3+Income+Stmt+Template

Problem+4-3+Income+Stmt+Template - items listed in the...

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MAHER, INC. (Problem 4-3) Income Statement For the year ended December 31, 2010 Sales or Revenue 2,000,000 Cost of Goods Sold 800,000 Gross Profit 1,200,000 Selling Expenses 200,000 Administrative Expenses 210,000 Total Selling and Administrative 410,000 Income from Operations before tax 790,000 Income Tax XXXXXX Income from Continuing Operations XXXXXX Discontinued Operations – net of tax XXXXXX Income before Extraordinary Item XXXXXX Extraordinary Item – net of tax XXXXXX Net Income XXXXXX Earnings Per Share of Common Stock Income from Continuing Operations X.XX Discontinued Operations, net of tax X.XX Income before extraordinary items X.XX Extraordinary item, net of tax X.XX Net income X.XX Step 1 in solving Problem 4-3 – We must determine which of the six
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Unformatted text preview: items listed in the problem will require an adjustment to the $790,000 income figure given in the problem and which items will be recorded after Income from Continuing Operations before Taxes (IFCOBT). Before IFCOBT After IFCOBT 1. Uninsured Flood Loss YES 2. Depreciation Error Note that error is recorded in Retained Earnings for years Before 2010. YES 3. Loss on Securities YES 4. Insurance Proceeds YES 5. Discontinued Operation YES 6. Change in method of valuing Inventory from average cost to FIFO. No adjustment needed Since FIFO was used to compute 2010 income. There will be an Adjustment to Beginning Retained Earnings for the effect on prior Years income....
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