Total expenses 88440 Income before income tax 25290 Income tax 9070 Net income

Total expenses 88440 income before income tax 25290

This preview shows page 3 - 6 out of 10 pages.

            Total expenses.............................................................       88,440Income before income tax.......................................................25,290Income tax................................................................................        9,070      Net income.........................................................................$  16,220Earnings per share..................................................................$.40Note: An alternative income statement format for the single-step form is to showincome tax a part of expenses, and not as a separate item.(c)Single-step:1.Simplicity and conciseness.2.Probably better understood by users.3.Emphasis on total costs and expenses and net income.4.Does not imply priority of one revenue or expense over another.3
Background image
EXERCISE 4-5 (Continued)Multiple-step:1.Provides more information through segregation of operating and nonoperating items.2.Expenses are matched with related revenue.Note to instructor:  Students’ answers will vary due to the nature of thequestion; i.e., it asks for an opinion. However, the discussion supporting theanswer should include the previous points.EXERCISE 4-13 Net income:      Income from continuing operations           before income tax$23,650,000      Income tax (35% X $23,650,000)      8,277,500      Income from continuing operations15,372,500      Discontinued operations            Loss before income tax$3,225,000            Less: Applicable income tax (35%)    1,128,750      (2,096,250)      Net income$13,276,250Preferred dividends declared:$  1,075,000Weighted average common shares outstanding4,000,000Earnings per share      Income from continuing operations$3.57*      Discontinued operations, net of tax      (.52)**      Net income$3.05***   *($15,372,500 – $1,075,000) ÷ 4,000,000. (Rounded)  **$2,096,250 ÷ 4,000,000. (Rounded)***($13,276,250 – $1,075,000) ÷ 4,000,000.4
Background image
 EXERCISE 4-15 (a)ROXANNE CARTER CORPORATIONStatement of Comprehensive IncomeFor the Year Ended December 31, 2014Sales revenue.............................................................................$1,200,000Cost of goods sold.....................................................................       750,000Gross profit.................................................................................450,000Selling and administrative expenses.......................................       320,000Net income..................................................................................130,000
Background image
Image of page 6

You've reached the end of your free preview.

Want to read all 10 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes