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87 charges to insurance expense during 20x2 975000

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87)Charges to insurance expense during 20X2$ 975,000− Decrease in prepaid insurance ($310,000 − $265,000)(45,000)= Insurance premiums paid in 20X2$ 930,000The total amount of insurance premiums paid in 20X2 is equal to theinsurance expense for 20X2 less the decline in the balance in prepaidinsurance.88)20X1 sales redeemed or expired in 20X2$90,00020X2 sales redeemed in 20X2325,00020X2 gift certificate revenue$415,000Version 141
Any 20X1 certificates unredeemed at 1/1/X2 will either be redeemed orexpire in 20X2 and thus should be included in 20X2 net income alongwith the dollar amount of certificates sold and redeemed in 20X2.89)Lazer Industries, Inc.Income StatementFor the year ended December 31, 20X1Net sales$1,200,000Cost of goods sold(300,000)Gross profit900,000Selling, general and administrative expenses(170,000)Unusual or infrequently occurring items:Interest expense(150,000)Gain on sale of investments30,000Restructuring charges(20,000)Income from continuing operations before income tax590,000Income tax expense(123,900)Income from continuing operations466,100Discontinued operations:Gain on sale of discontinued operations, net of tax316,000Net income$782,10090)Version 142
Berg, Inc.Income StatementFor the year ended December 31Revenue$2,100,000Cost of goods sold(900,000)Gross profit1,200,000Selling, general and administrative expenses:Office salaries expense(150,000)Advertising expense(180,000)Rent expense(100,000)Unusual or infrequently occurring items:Interest expense(30,000)Flood damage to facilities(60,000)Restructuring charges(80,000)Income from continuing operations before income tax600,000Income tax expense(126,000 )Net income$474,00091)Realized loss from 1/1X1 to 7/31X1$ (400,000)Realized loss from 8/1X1 to 12/31X1(250,000)Total pre-tax loss(650,000)Tax benefit at 21%136,500Loss from discontinued operations, net of tax effect$ (513,500)Version 143
Under GAAP, results of operations on an operating segment orcomponent of an entity classified as held for sale are to be reported indiscontinued operations in the periods in which they occur (net of taxeffects). None of the expected profit from operating the segment orcomponent of the entity in 20X2 or the estimated gain on sale isrecognized in 20X1. These amounts will be recognized in 20X2 as theyoccur.92)Income from continuing operations ($1,750,000 −$360,000)$ 1,390,000Income tax expense ($1,390,000 × 0.21)291,900Income from continuing operations1,098,100Discontinued operations:Income from discontinued operations (net of taxes of$75,600) from 1/1X1 through 11/15X1284,400Loss on disposal of discontinued operations (net of taxbenefit of $31,500)(118,500)Net income$ 1,264,000Sale price of segment − book value of segment = gain (loss) on disposal= $2,750,000 − $2,900,000 = $(150,000) pretax loss.93) Net income – Preferred stock dividend = $23.7 − $3.0 = $20.7million.Weighted Average number of common shares = (0.5 × 10) + (0.5× 16) = 13 million shares.EPS = $20.7 million net income ÷ 13 millionshares = $1.59 per share.Version 144
94)Item NumberEffect of OmissionAssetsLiabilitiesNet Incomea.Direction of effectUSNEUSDollar amount ofeffect$ 3,000$3,000b.Direction of effectNEUSOSDollar amount ofeffect$ 27,000$ 27,000c.Direction of effectNEUSOSDollar amount ofeffect$1,300$1,300d.Direction of effectNEUSOSDollar amount ofeffect$9,000$9,000e.Direction of effectOSNEOSDollar amount ofeffect$ 3,250$3,250
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Summer
Professor
C. Baker
Tags
Income Statement, Generally Accepted Accounting Principles

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