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Intermediate Accounting Week 2 Hw Essay

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Homework Assignment 2
March 6, 2012

Exercise 4-8
(a)
BROKAW CORP.
Income Statement
For the Year Ended December 31, 2012
____________________________________________________________

___________

Sales Revenue
    Net Sales ………...………………………………………………………$1,200,000
Cost of Goods Sold……………………………………………………………..780,000
    Gross Profit …………………………………………………………………420,000

Operating Expenses
    Selling Expenses……………………………………...65,000
    Administrative Expenses……………………………..48,000                       113,000
Income from Operations ……………………………………………………….307,000

Other Revenues and Gains
    Dividend Revenue ……………………………………20,000
    Interest Revenue………………………………………..7,000                         27,000
    334,000
Other Expenses and Losses
    Write-off of Inventory due to Obsolescence………………………………....80,000
Income from Continuing Operations before Income Tax ……………………..254,000
Income Tax ………….………….……………………………………………… 86,360
Income from Continuing Operations …………………………………………. 167,640

Extraordinary Item – Casualty Loss …………………….50,000
    Less: Applicable Income Tax………………………...17,000                         33,000
Net Income……………………………………………………………………. 134,640

    Per Share of Common Stock
    Income from Continuing Operations ($167,640/60,000) ……………………...2.79
    Extraordinary Loss, Net of Tax…………………………………………...……0.55
    Net Income ($134,640/60,000) ……………………………………………….. 2.24

(b)
BROKAW CORP.
Retained Earnings Statement
For the Year Ended December 31, 2012
____________________________________________________________

____________

Retained Earnings, Jan 1, as reported ………………………………………...$980,000
Correction for Overstatement of Depreciation Expense in
  Prior Period – depreciation error (net of tax)…………………….……………. 26,400
Retained Earnings, January 1, as Adjusted……………………………………..953,600
Add: Net Income………………………………………………………………..134,640...

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