Intermediate Accounting Help. AAHHH Help!?

Question

The following information was taken from the records of Evelyn Roberts Inc. for the year 2008:

Extraordinary gain from expropriation $95,000
Loss on discontinuance of Micron Division 75,000
Administrative expenses 240,000
Rent Revenue 40,000
Extraordinary loss - flood 60,000
Cash dividends declared 70,000
Retained earnings, January 1, 2008 600,000
Cost of goods sold 850,000
Selling expenses 300,000
Sales 1,900,000

The following information was also available: income tax applicable to income from continuing operations, $187,000; income tax applicable to loss on discontinuance of Micron Division, $25,000; income tax applicable to extraordinary gain from expropriation, $29,000; income tax applicable to extraordinary loss from a flood, $18,000. Shares outstanding during 2008 were 25,000.
a) Prepare a single-step income statement for 2008.
b) Prepare a combined single-step income and retained earnings statement.

Bonus points would be awarded for the best answer. =)

Answer 1

Both (a) and (b) ask for single-step statements, but if I do that, you won't know how I got the figures, so for (a), I'll do you a multiple-step statement. I won't use brackets for expenses and losses, so watch out for words like gain and loss. They'll indicate whether you should add or minus. Remember that an extraordinary gain would be reduced by the income tax EXPENSE associated with the gain; an extraordinary loss would be reduced by the income tax SAVINGS associated with the loss. This actually needs a few columns, but I can't do that here, so I'll indicate when something is a subtotal.

(a) Multiple-step income statement

Sales 1,900,000
COGS 850,000
Gross profit 1,050,000
Less:
Operating expenses
Selling exp. 300,000
Admin. exp. 240,000
Op'g income 510,000
Non-op'g income
Rent revenue 40,000
Income from continuing op'ns before tax (subtotal) 550,000
Income taxes 187,000
Income from continuing op'ns, net of tax (subtotal) 363,000
DISCONTINUED OP'NS
Loss on discontinuance of Micron Div. 75,000
Income tax benefit from loss 25,000
Loss from discont'd op'ns, net of tax (subtotal) 50,000
EXTRAORDINARY ITEMS
Gain from expropriation 95,000
Tax on gain 29,000
Loss from flood 60,000
Tax benefit from loss 18,000
Extraordinary gain, net of tax (subtotal) 24,000

NET INCOME 337,000

(b) Combined single-step income and retained earnings statement

Revenues
Sales 1,900,000
Rent 40,000
Total revenues 1,940,000

Costs & Expenses
Cost of goods sold 850,000
Selling exp. 300,000
Admin. exp. 240,000
Total costs & exp. 1,390,000

Income from continuing op'ns before tax 550,000
Income taxes 187,000
Income from continuing op'ns, net of tax 363,000
Discontinued op'ns, loss, net of tax 50,000
Extraordinary items, gain, net of tax 24,000
Net income 337,000
Less : Dividends 70,000
Add : Retained earnings at beg. of year 600,000
Retained earnings at end of year 867,000

Nathe, I think I shall retire from Answers after this!

Answer 2

From my adventure Intermediate Accounting may be the toughest accounting training to take. Now granted it became been fairly a whilst in the past on account that i've got taken those classes, yet from my memory managerial accounting (a minimum of for me) became particularly elementary, yet intermediate became the make you or destroy you training for college youngsters that have been majoring in accounting. In others words - those have been the training the place many pupils making plans on majoring in accounting, desperate to alter to advertising as a considerable and drop the training.