Accounting Help - Urgently

profileKnowledgeCats
accounting_2_questions-_urgently_required.xlsx
Home>Business & Finance homework help>Accounting homework help>Accounting Help - Urgently

Income Statement

INCOME STATEMENT - 45 POINTS
Torino Inc. reported income from continuing operations before taxes during 2012 of $801540. Additional transactions occurring in 2012 but not considered in the $801540 are as follows.
1. The corporation experienced an uninsured flood loss (extraordinary) in the amount of $90600 during the year. The tax rate on this item is 46%.
2. At the beginning of 2010, the corporation purchased a machine for $56000 (salvage value of $8980) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2010, 2011, and 2012 but failed to deduct the salvage value in computing the depreciation base.
3. Sale of securities held as a part of its portfolio resulted in a loss of $56850 (pretax).
4. When its president died, the corporation realized $155000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $46120 (the gain is nontaxable).
5. The corporation disposed of its recreational division at a loss of $115500 before taxes. Assume that this transaction meets the criteria for discontinued operations.
6. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2010 income by $61200 and decrease 2011 income by $21320 before taxes. The FIFO method has been used for 2012. The tax rate on these items is 40%.
Instructions
Prepare an income statement for the year 2012 starting with income from continuing operations before taxes. Compute earnings per share as it should be shown on the face of the income statement. Common shares outstanding for the year are 119500 shares. (Assume a tax rate of 30% on all items, unless indicated otherwise.)
TORINO INC.
Income Statement (Partial)
For the Year Ended December 31, 2012
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 Computation of income from cont. operations before taxes: 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 Computation of income tax: 31
32 32
33 33
34 34
35 35
36 36
37 37
38 38
39 39
40 40

&K000000&F

&K000000&A

Balance Sheet

BALANCE SHEET - 40 POINTS
The adjusted trial balance of Russell Company and other related information for the year 2012 are presented below. 1 RUSSELL COMPANY 1
2 Balance Sheet 2
3 December 31, 2012 3
RUSSELL COMPANY 4 Assets 4
Adjusted Trial Balance 5 5
December 31, 2012 6 6
Debits Credits 7 7
Cash $ 41,310 8 8
Accounts Receivable 162,457 9 9
Allowance for Doubtful Accounts $ 8,845 10 10
Prepaid Insurance 5,578 11 11
Inventory 208,880 12 12
Equity Investments (long-term) 336,870 13 13
Land 84,750 14 14
Construction in Process (building) 141,000 15 15
Patents 40,500 16 16
Equipment 401,250 17 17
Accumulated Depreciation - Equipment 241,150 18 18
Discount on Bonds Payable 19,860 19 19
Accounts Payable 150,314 20 20
Accrued Expenses 47,754 21 21
Notes Payable 93,300 22 22
Bonds Payable 198,600 23 23
Common Stock 488,000 24 24
Paid in Capital in Excess of Par - Common Stock 43,920 25 25
Retained Earnings 170,572 26 26
$ 1,442,455 $ 1,442,455 27 27
28 28
Additional information: 29 Liabilities and Stockholders' Equity 29
1. The LIFO method of inventory value is used 30 30
2. The cost and fair value of the long-term investments that consist of stocks and bonds is the same. 31 31
32 32
3. The amount of the Construction in Process account represents the costs expended to date on a building in the process of construction. (The company rents factory space at the present time.) The land on which the building is being constructed cost $84750, as shown in the trial balance. 33 33
34 34
35 35
36 36
4. The patents were purchased by the company at a cost of $45000 and are being amortized on a straight-line basis. 37 37
38 38
5. Of the discount on bonds payable, $1986 will be amortized in 2013. 39 39
6. The notes payable represent bank loans that are secured by long-term investments carried at $118400. These bank loans are due in 2013. 40 40
41 41
7. The bonds payable bear interest at 8% payable every December 31, and are due January 1, 2023. 42 42
43 43
8. 588000 shares of common stock of a par value of $1 were authorized, of which 488000 shares were issued and outstanding. 44 44
45 45
46 46
Instructions 47 47
Prepare a balance sheet as of December 31, 2012, so that all important information is fully disclosed. 48 48
49 49
50 50
51 51

&K000000&F

&K000000&A

Statement of Cash Flows

STATEMENT OF CASH FLOWS - 50 POINTS
Stanley Company operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Stanley as of May 31, 2012, are shown below. The company is preparing its statement of cash flows.
(a) Direct Method
STANLEY COMPANY
Statement of Cash Flows
STANLEY COMPANY For the Year Ended May 31, 2012
Comparative Balance Sheet 1 1
As of May 31 2 2
2012 2011 3 3
Current Assets 4 4
Cash $ 28,820 $ 21,310 5 5
Accounts receivable 74,890 57,740 6 6
Inventory 220,020 252,520 7 7
Prepaid expenses 8,996 7,006 8 8
Total current assets 332,726 338,576 9 9
Plant assets 10 10
Plants assets 598,430 501,650 11 11
Less accumulated 12 12
depreciation - plant assets 152,200 124,780 13 13
Net plant assets 446,230 376,870 14 14
Total assets $ 778,956 $ 715,446 15 15
Current Liabilities 16 16
Accounts payable $ 123,900 $ 116,000 17 17
Salaries and wages payable 46,640 71,650 18 18
Interest payable 27,120 25,990 19 19
Total current liabilities 197,660 213,640 20 20
Long-term debt 21 21
Bonds payable 70,300 101,650 22 22
Total liabilities 267,960 315,290 23 23
Stockholders' equity 24 24
Common stock, $10 par 370,000 280,000 25 25
Retained earnings 140,996 120,156
Total stockholders' equity 510,996 400,156 (a) (Continued)
Total liabilities and stockholders' equity $ 778,956 $ 715,446 Computations:
STANLEY COMPANY
Income Statement
For the Year Ended May 31, 2012
Sales $ 1,268,450
Cost of goods sold 715,460
Gross profit 552,990
Expenses
Salaries and wages expense 251,460
Interest expense 71,450
Depreciation expense 27,420
Other expenses 8,824
Total expenses 359,154
Operating income 193,836
Income tax expense 48,459
Net income $ 145,377
The following is additional information concerning Stanley's transactions during the year ended May 31, 2012.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, compromising the total accounts payable account.
3. Plant assets costing $96780 were purchase by paying $26680 in cash and issuing 7010 shares of stock.
4. The "other expenses" are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Stanley issued 1990 shares of common stock at par value.
7. Cash dividends of $124537 were declared and paid at the end of the fiscal year.
Instructions
a) Prepare a statement of cash flows for Stanley Company for the year ended May 31, 2012, using the direct method of presentation. Be sure to support the statements with the appropriate calculations. (A reconciliation of net income to net cash is not required).
(b) Indirect Method
b) Using the indirect method, calculate only the net cash flow from operating activities for Stanley Company for the year ended May 31, 2012. STANLEY COMPANY
Partial Statement of Cash Flows
For the Year Ended May 31, 2012
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14

&K000000&F

&K000000&A