d A gain on sale of equipment in shown under other revenues and gains in the

D a gain on sale of equipment in shown under other

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(d) A gain on sale of equipment in shown under other revenues and gains in the income statement. 26. The earnings per share trend is not favorable. Discontinued items are often one-time occurrences which are not expected to be reported in the future. Therefore, earnings per share on income from continuing operations is more useful because it represents the
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results of ordinary business activity. Considering this EPS amount, EPS has decreased from $7.21 to $6.40. 30. The damages are reported in Frazier Corporation’s financial statements in the other expenses and losses section. The damages would not be reported as a correction of an error (prior period adjustment). EXERCISE 4-3 (a) Total net revenue: Sales revenue .................................................................. $390,000 Less: Sales discounts .................................................... $ 7,800 Sales returns and allowances ............................ 12,400 20,200 Net sales ........................................................................... 369,800 Dividend revenue ............................................................ 71,000 Rent revenue .................................................................... 6,500 Total net revenue ................................................... $447,300 (b) Net income: Total net revenue (from a) .............................................. $447,300 Expenses: Cost of goods sold .................................................... 184,400 Selling expenses ....................................................... 99,400 Administrative expenses .......................................... 82,500 Interest expense ........................................................ 12,700 Total expenses ..................................................... 379,000 Income before income tax .............................................. 68,300 Income tax ........................................................................ 31,000 Net income ................................................................. $ 37,300 (c) Dividends declared: Ending retained earnings ............................................... $125,000
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Beginning retained earnings .......................................... 114,400 Net increase ................................................................................ 10,600 Less: Net income (attributed to controlling shareholders)... 20,300* Dividends declared .................................................................... $ 9,700 * $37,300-$17,000 ALTERNATE SOLUTION Beginning retained earnings ........................................................ $114,400 Add: Net income ............................................................................ 20,300* 134,700 Less: Dividends declared ............................................................. ? Ending retained earnings .............................................................. $125,000 *$37,300-$17,000 (Attributed to controlling shareholders). Dividends declared must be $9,700 ($134,700 – $125,000) (d) Income attributed to controlling stockholders = (Net income – allocation to noncontrolling interest) $37,300 - $17,000 = $ 20,300 Net income $37,300 Allocation to noncontrolling interest 17,000 Income attributable to controlling interest $20,300 EXERCISE 4-5 (a) Multiple-Step Form P. BRIDE COMPANY Income Statement For the Year Ended December 31, 2017 (In thousands, except earnings per share)
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Sales revenue ...................................................... $96,500 Cost of goods sold ............................................. 60,570 Gross profit ......................................................... 35,930 Operating Expenses Selling expenses Sales commissions ................................. $7,980 Depr. of sales equipment ........................ 6,480 Delivery expense ..................................... 2,690 $17,150 Administrative expenses Officers’ salaries ..................................... 4,900 Depr. of office furn. and equip ............... 3,960 8,860 26,010 Income from operations ................... 9,920 Other Revenues and Gains Rent revenue ................................................. 17,230 27,150 Other Expenses and Losses Interest expense ............................................ 1,860 Income before income tax .................................. 25,290 Income tax ..................................................... 9,070 Net income ........................................................... $16,220 Earnings per share ($16,220 ÷ 40,550) .............. $.40 (b) Single-Step Form P. BRIDE COMPANY Income Statement For the Year Ended December 31, 2017 (In thousands, except earnings per share)
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Revenues Net sales ............................................................................. $ 96,500 Rental revenue ................................................................... 17,230 Total revenues .............................................................. 113,730 Expenses Cost of goods sold ............................................................ 60,570 Selling expenses ................................................................ 17,150 Administrative expenses ................................................... 8,860 Interest expense ................................................................. 1,860 Total expenses ............................................................. 88,440 Income before income tax ....................................................... 25,290 Income tax ................................................................................ 9,070 Net income ......................................................................... $ 16,220 Earnings per share .................................................................. $.40 Note: An alternative income statement format for the single-step form is to show income tax a part of expenses, and not as a separate item.
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