A prepare an income statement for the year 2012 using

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discussion involves the following 2012 information related to Webster Company ($000 omitted). (a) Prepare an income statement for the year 2012 using the multiple-step form. Common shares
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987b4adf2e74f9aa851952442c0257ad6d48389e.xlsx, E4-4, Page 6 of 16, 03/03/2016, 09:54:19 Name: Date: Instructor: Course: Income before taxes Formula Account Title Amount Net income Formula Title Formula outstanding for 2012 total 40,550 (000 omitted). WEBSTER COMPANY Single-Step Income Statement For the Year Ended December 31, 2012 (In thousands, except earnings per share) Revenues Net sales Amount Title Amount Total revenues Formula Expenses Title Amount Title Amount Title Amount Title Amount Total expenses Formula Income before taxes Formula Title Amount Net income Formula Title Formula Single-step: Multiple-step: (b) Prepare an income statement for the year 2012 using the single-step form. Common shares (c) Which one do you prefer? Discuss.
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987b4adf2e74f9aa851952442c0257ad6d48389e.xlsx, E4-11 Solution, Page 7 of 16, 03/03/2016, 09:54:19 Name: Solution Date: Instructor: Course: Year Net income Dividends declared 2009 $40,000 $0 2010 125,000 50,000 2011 160,000 50,000 The following information relates to 2012: Income before income taxes $220,000 Prior period adjustment: Understatement of 2010 depreciation expense. (Before taxes) $25,000 Cumulative decrease in income from change in inventory methods (before taxes) $45,000 Dividends declared $100,000 Of the dividends declared to date, the amount that will be paid on Jan 15, 2013 is: $25,000 Effective tax rate 40% Instructions: McENTIRE CORPORATION Retained Earnings Statement For the Year Ended December 31, 2012 Balance, January 1, as reported ($40,000 + $125,000 + $160,000 - $50,000 - $50,000) $225,000 Correction for depreciation error (net of $25,000, - 40% tax rate or $10,000 tax) (15,000) (27,000) Balance, January 1, as adjusted 183,000 Add: Net income [$220,000 - ($220,000 * 40%)] 132,000 315,000 Deduct dividends declared 100,000 Balance, December 31 $215,000 $70,000 Retained earnings Appropriated $70,000 Unappropriated 145,000 Total $215,000 Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse E4-11 (Retained Earnings Statement) McEntire Corporation began operations on January 1, 2007. During its first 3 years of operations, McEntire reported net income and declared dividends as follows. (a) Prepare a 2012 retained earnings statement for McEntire Corporation. Cumulative decrease in income from change in inventory methods (net of $45,000 - 40% tax or $18,000 tax) (b) Assume McEntire Corp. restricted retained earnings in the amount of on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet? Total retained earnings would still be reported as $215,000. A restriction does not affect total retained earnings; it merely labels part of the retained earnings as being unavailable for dividend distribution. Retained earnings would be reported as follows:
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987b4adf2e74f9aa851952442c0257ad6d48389e.xlsx, E4-11, Page 8 of 16, 03/03/2016, 09:54:19 Name: Date: Instructor: Course: Year Net income Dividends declared 2009 $40,000 $0 2010 125,000 50,000 2011 160,000 50,000 The following information relates to 2012: Income before income taxes $220,000 Prior period adjustment: Understatement of 2010 depreciation expense.
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