Ex. 203
Santo Corporation experienced a fire on December 31, 2014, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.
December 31, 2014December 31, 2013
Cash$ 30,000$ 10,000
Accounts receivables (net)84,000126,000
Inventory200,000180,000
Accounts payable50,00090,000
Notes payable30,00060,000
Share capital – ordinary, $100 par400,000400,000
Retained earnings130,000101,000
Additional information:
1.The inventory turnover is 5 times
2.The return on ordinary shareholders' equity is 18%. The company had no share premium.
3.The accounts receivable turnover is 9.4 times.
4.The return on assets is 16%.
5.Total assets at December 31, 2013, were $585,000.
Instructions
Compute the following for Santo Corporation.
(a)Cost of goods sold for 2014.
(b)Net sales (credit) for 2014.
(c)Net income for 2014.
(d)Total assets at December 31, 2014.
Ex. 204
For its fiscal year ending October 31, 2014, Conrad Corporation reported the following partial data
Income before income taxes$ 700,000
Income tax expense (30% x 450,000)135,000
Income from continuing operations565,000
Loss from discontinued operations250,000
Net income$ 315,000
The income tax rate is 30% on all items.
Instructions
Prepare a correct income statement, beginning with income before income taxes.
Ex. 205
Gumble Corporation had income from continuing operations of $300,000 for the year ended December 31, 2014. It also had a loss of $60,000 (before income taxes) on discontinuance of a division.
Gumble is subject to income taxes at a 30% tax rate.
Instructions
Prepare a partial income statement, beginning with income from continuing operations.