LO 4 Bloom AP Difficulty Moderate AACSB Analytic AICPA BB None AICPA

Lo 4 bloom ap difficulty moderate aacsb analytic

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LO: 4, Bloom: AP, Difficulty: Moderate, Time: 15-20, AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, Reporting, AICPA PC: None
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EXERCISE 4-14 (15–20 minutes) (a) 2017 Income before income tax $450,000 Income tax (35%) 157,500 Net Income $292,500 (b) Cumulative effect for years prior to 2017. Year Weighted- Average FIFO Difference Tax Rate (35%) Net Effect 2015 $370,000 $395,000 $25,000 2016 390,000 430,000 40,000 Total $65,000 $22,750 $42,250 (c) 2017 2016 2015 Income before income tax $450,000 $430,000 $395,000 Income tax (35%) 157,500 150,500 138,250 Net income $292,500 $279,500 $256,750 LO: 5, Bloom: AP, Difficulty: Moderate, Time: 15-20, AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, Reporting, AICPA PC: None EXERCISE 4-15 (15–20 minutes) (a) ROXANNE CARTER CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2017 Sales revenue ............................................................................ $1,200,000 Cost of goods sold ................................................................... 750,000 Gross profit ............................................................................... 450,000 Selling and administrative expenses ...................................... 320,000 Net income ................................................................................ 130,000 Other comprehensive income unrealized holding gain ........ 18,000 Comprehensive income ........................................................... $ 148,000
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EXERCISE 4-15 (Continued) (b) ROXANNE CARTER CORPORATION Income Statement For the Year Ended December 31, 2017 Sales .......................................................................................... $1,200,000 Cost of goods sold ................................................................... 750,000 Gross profit ............................................................................... 450,000 Selling and administrative expenses ...................................... 320,000 Net income ................................................................................ $ 130,000 Net income ................................................................................ $ 130,000 Other comprehensive income unrealized holding gain ........ 18,000 Comprehensive income ........................................................... $ 148,000 LO: 3, 7, Bloom: AP, Difficulty: Simple, Time: 15-20, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None EXERCISE 4-16 (15–20 minutes) C. REITHER CO. Statement of Stockholders’ Equity For the Year Ended December 31, 2017 Total Retained Earnings Accumulated Other Comprehensive Income Common Stock Beginning balance $520,000 $ 90,000 $80,000 $350,000 Net income* 120,000 120,000 Other comprehensive income Unrealized holding loss (60,000) (60,000) Dividends (10,000) (10,000) Ending balance $570,000 $200,000 $20,000 $350,000 *($700,000 – $500,000 – $80,000). LO: 6, 7, Bloom: AP, Difficulty: Moderate, Time: 15-20, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None
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EXERCISE 4-17 (30–35 minutes) (a) ROLAND CARLSON INC. Income Statement For the Year Ended December 31, 2017 Revenues Sales revenue .............................................................. $1,900,000 Rent revenue ............................................................... 40,000 Total revenues .................................................. 1,940,000 Expenses Cost of goods sold ........................................... 850,000 Selling expenses .............................................. 300,000 Administrative expenses ................................. 240,000 Total expenses ........................................ 1,390,000 Income from operations ................................... 550,000 Other revenues and gains Gain on sale of equipment ............................... 95,000 Other expenses and losses Inventory loss .................................................... 60,000 Income from continuing operations before income tax ............................................................... 585,000 Income tax ......................................................... 187,000 Income from continuing operations ......................... 398,000 Discontinued operations Loss on discontinued operations .................... $75,000 Less: Applicable income tax reduction .......... 25,500 (49,500) Net income .................................................................. $ 348,500 Per share of common stock: Income from continuing operations ($398,000 ÷ 100,000) ....... $3.98 Loss on discontinued operations, net of tax ........................ (.50) Net income ($348,500 ÷ 100,000) .......................................... $3.48
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EXERCISE 4-17 (Continued) (b) ROLAND CARLSON INC. Comprehensive Income Statement For the Year Ended December 31, 2017 Net income ................................................................................ $348,500 Other comprehensive income Unrealized holding gain, net of tax ................................... 15,000 Comprehensive income ........................................................... $363,500 (c) ROLAND CARLSON INC. Retained Earnings Statement For the Year Ended December 31, 2017 Retained earnings, January 1 .......................................................... $600,000 Add: Net income ............................................................................... 348,500 948,500 Less: Dividends declared ................................................................ 150,000 Retained earnings, December 31 .................................................... $798,500 LO: 3, 4, 6, 7, Bloom: AP, Difficulty: Moderate, Time: 30-35, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None
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