Single-step income statement - I can't figure it out Help
The trial balance of Lakewood Inc. included the following accounts as of December 31,
2009:
Sales revenue ----------------------------300,000
Interest revenue--------------------------- 80,000
Gains on sale of land
(infrequent but not unusual item)------------------- 50,000
Loss on expropriated foreign assets
(event is unusual, infrequent and material--------------300,000
Cost of Goods Sold -----------------------------1,100,000
Salaries and wages -------------------------------220,000
Write-off of obsolete equipment--------------- 30,000
Depreciation expense --------------------------150,000
Interest expense ----------------------------------40,000
Marketing and
Administrative expenses--------- 50,000
Lakewood Inc. had 100,000 shares of stock outstanding throughout the year. . Income tax
Expense has not yet been accrued. The effective tax rate is 30%.
Required: Prepare a single-step income statement with basic earnings per share disclosure.
Accounting Homework Question
For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer.
a. Cantor Corporation's accountant increased the book value of a patent from its original
cost of $1 million to its recently appraised value of $6 million.
b. Stanton Corporation paid for the personal travel of its chief financial officer and
charged travel expense.
c. At the end of its 2009 fiscal year, Dower, Inc. received an order from a customer for
$60,000. The merchandise will ship early in 2010. Because the sale was made to a longtime
customer and the invoice was paid in 2009, the controller recorded the sale in 2009.
d. In the middle of its 2009 fiscal year, Sanguinetti, Inc. paid $12,000 to its insurance
company for one-year comprehensive insurance coverage. Sanguinetti recorded the entire
expenditure as an expense in 2009.
e. The Churchill Pharmaceutical Company included a note in its financial statements that
described a pending lawsuit against the company.
f. The Daily Corporation, a company whose securities are publicly traded, prepares
monthly, quarterly, and annual financial statement for internal use but disseminates to
external users only the annual financial statements.
Agree/Disagree Reason
A Disagree - Historical Cost Principle
B
C
D
E
F
Accounting Homework Question
For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer.
a. Cantor Corporation's accountant increased the book value of a patent from its original
cost of $1 million to its recently appraised value of $6 million.
b. Stanton Corporation paid for the personal travel of its chief financial officer and
charged travel expense.
c. At the end of its 2009 fiscal year, Dower, Inc. received an order from a customer for
$60,000. The merchandise will ship early in 2010. Because the sale was made to a longtime
customer and the invoice was paid in 2009, the controller recorded the sale in 2009.
d. In the middle of its 2009 fiscal year, Sanguinetti, Inc. paid $12,000 to its insurance
company for one-year comprehensive insurance coverage. Sanguinetti recorded the entire
expenditure as an expense in 2009.
e. The Churchill Pharmaceutical Company included a note in its financial statements that
described a pending lawsuit against the company.
f. The Daily Corporation, a company whose securities are publicly traded, prepares
monthly, quarterly, and annual financial statement for internal use but disseminates to
external users only the annual financial statements.
Agree/Disagree Reason
A Disagree - Historical Cost Principle
B
C
D
E
F
