7 Retained earnings Appropriated 70000 Unappropriated 163000 Total 233000

7 retained earnings appropriated 70000 unappropriated

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7 Retained earnings: Appropriated ...................................... $ 70,000 Unappropriated .................................. 163,000 Total .................................................. $233,000 EXERCISE 4-13 (15–20 minutes) 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 operations ................. 15,372,500 Discontinued operations Loss before income tax ............................... $3,225,000 Less: Applicable income tax (35%) ............ 1,128,750 (2,096,250) Net income .......................................................... $13,276,250 Preferred dividends declared: ................................ $ 1,075,000
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8 Weighted average common shares outstanding ...... 4,000,000 Earnings 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.
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9 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
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10 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).
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