157500 15050 138250 Net income 292500 27950 256750 PROBLEM 4 1 DICKINSON

157500 15050 138250 net income 292500 27950 256750

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  157,500   150,50   138,250
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0 Net income $292,500 $279,50 0 $256,750 PROBLEM 4-1 DICKINSON COMPANY Income Statement For the Year Ended December 31, 2014 Sales revenue .................................................................... $25,000,000 Cost of goods sold ...........................................................   16,000,000 Gross profit ....................................................................... 9,000,000 Selling and administrative expenses ..............................     4,700,000 Income from operations ................................................... 4,300,000 Other revenues and gains Interest revenue ...................................................... $  70,000 Gain on the sale of investments ...........................   110,000 180,000 Other expenses and losses Write-off of goodwill ...............................................        820,000 Income from continuing operations before     income tax ....................................................................... 3,660,000 Income tax .........................................................................     1,244,000 Income from continuing operations ................................ 2,416,000 Discontinued operations Loss on operations, net of applicable tax ............ 90,000 Loss on disposal, net of applicable tax ...............   440,000       (530,000) Income before extraordinary item ................................... 1,886,000 Extraordinary item—loss from flood      damage, net of applicable tax ......................................        390,000 Net income ......................................................................... $  1,496,000 Earnings per share: Income from continuing operations ...................... $ 4.67 a Discontinued operations Loss on operations, net of tax ...................... $(0.18) Loss on disposal, net of tax ..........................   (0.88 )    (1.06 ) Income before extraordinary item .......................... 3.61 b Extraordinary loss, net of tax .................................       (0.78 )
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Net income ............................................................... $ 2.83 c
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PROBLEM 4-1 (Continued) DICKINSON COMPANY Retained Earnings Statement For the Year Ended December 31, 2014 Retained earnings, January 1 ................................. $     980,000 Add:  Net income ...................................................     1,496,000 2,476,000 Less   Dividends declared on:   Preferred stock ............................................. $  80,000   Common stock .............................................   250,000        330,000 Retained earnings, December 31 ........................... $  2,146,000 a $2,416,000 – $80,000 = $4.67 500,000 shares b $1,886,000 – $80,000 = $3.61 500,000 shares c $1,496,000 – $80,000 = $2.83 500,000 shares PROBLEM 4-3 MAHER INC. Income Statement (Partial) For the Year Ended December 31, 2014 Income from continuing operations     before income tax ........................................................ Income tax ............................................................ Income from continuing operations ............................. Discontinued operations Loss from disposal of recreational      division ............................................................. $115,000 (1) Less:  Applicable income tax reduction ............     34,500
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Income before extraordinary item ................................. Extraordinary item: Major casualty loss .............................................. 90,000 (2) Less:  Applicable income tax reduction ............     41,400 Net income ......................................................................       (1) $115,000   30%         (2) $90,000   46% Per share of common stock: Income from continuing operations ................... Discontinued operations, net of tax ................... Income before extraordinary items .................... Extraordinary item, net of tax ............................. Net income ($489,050  ÷  120,000) ........................ *Rounded (a) Computation of income from cont. operations before taxes:       As previously stated ................................................ $790,000       Loss on sale of securities ........................................ (57,000)      Gain on proceeds of life insurance           policy ($150,000 – $46,000) .................................. 104,000 Error in computation of depreciation As computed ($54,000  ÷  6) .......................................... $9,000 Corrected ($54,000 – $9,000)  ÷  6 .................................  (7,500 )       1,500 As restated .................................................................... $838,500
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PROBLEM 4-3 (Continued) (b)
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