Intermediate accounting

BE -

Date Explanations Debit Credit

Nov. Cash $
Unearned Rent Revenue
Dec. Unearned Rent Revenue $
Rent Revenue

Calculations:

Unearned rent revenue = $ (Given)

Rent revenue = ($ × )= ,

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BE

The cumulative effect of changing the estimated bad debt rate will be .

Vandross would not report any cumulative effect because changes in the estimate would not be handled
retrospectively. Only in the year , the cumulative effect of changing the estimated bad debt will be
reported.

In , the allowance for doubtful debts and bad debts expense will increase by . Hence the
cumulative effect comes out to be due to a change in the estimate.

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Intermediate accounting
E -

Answer:

a)

b)

c) Net Income

Explanation:

Part ) Determine the net income for as follows using the First In First Out (FIFO)

= FIFO = - The Income Tax

= -( x . )= - =

Part ) Compute the cumulative effect in change of the weighted average to FIFO

Year Weighted average FIFO Difference Tax@ %(difference) net effect

Total in Net effect

Part ) Show comparative income statement as follows

Income before tax

(-) tax % ( ) ( ) ( )

Net Income

E -
a-
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Intermediate accounting
Latifa Shoe Company
Income Statement
For the Year Ended December ,
Net Sales
Cost of Goods Sold ( )
Gross Profits
Operating Expenses
Administrative Expenses
Salaries and Wages Expense
Other Administrative Expenses
Depreciation on Plant and Assets
Total Administrative Expenses
Selling Expenses
Depreciation on Plant assets
Supplies Expense
Salaries and Wages expenses
Total Selling Expenses
Total Operating Expenses ( )
Income From Operations
Other Revenues and Gains
Rent Revenue
Other Expenses and Losses
Interest Expense ( )
Income before Income tax
Income Tax Expense ( )
Net Income
Earnings per Share

Calculations

. Calculation of Earnings per share

Earnings per share=Net Income ÷ Outstanding Common Stock= ÷ shares =

E -
b-
Preparing Single-Step Income Statement
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Intermediate accounting
Latifa Shoe Company
Income Statement
For the Year Ended December ,
Revenues
Net Sales
Rent Revenues
Total Revenues (A)
Expenses
Cost of Goods Sold
Selling Expenses
Administrative Expenses
Interest expenses
Total Expenses (B)
Income before Income taxes
Income tax expenses ( )
Net Income
Earnings per Share

Working Note

. Calculation of Earnings per Share

Earnings per share=Net Income÷Outstanding common stcok= ÷ shares=

C-
Multiple-step income statement is always preferable because it provides an in-depth analysis of all the business
activities for a particular period.

E -
Jan Account receivable
Service revenue

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Intermediate accounting
(To record service revenue received)

Jan Utility expenses

Account payable
(To record utilities expenses recorded)

Jan Depreciation expenses

Accumulated depreciation-Equipment
(To record accumulated depreciation is recorded)

Jan Interest expenses

Interest payable
(To record interest payable is recorded)

Jan Insurance expense ( = )

Prepaid insurance
(To record prepaid insurance is recorded)

Jan Supplies expenses ( - (in hand) = )

Supplies
(To record supplies expenses as recorded)

Note : Purchased dental equipment on January for , paying in cash and signing a
, -year note payable. January means it will be recorded at the start of the journal entry. Hence,
no need for an adjustment entry.

P -
Dickinson Company
Income Statement
For the year ended December ,
Sales Revenue

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Intermediate accounting
Cost of Goods Sold
Gross profit
Selling and administrative expenses
Income from operations
Other revenue and gains
Interest revenue
Gain on sale of investments

Other expenses and Losses

Write-off of goodwill ( )
Loss from flood damage ( )

Income from continuing operations before income

tax
Income tax
Income from continuing operations
Discontinuing Operations
Loss on operations net of applicable tax ( )
Loss on disposal ( )

Net Income
Earnings per share
Income from continuing operations
Discontinuing operations
Loss on operations ( )
Loss on disposal ( )
( )
Net Income

Note :

Income From Continuing operations per share=(Income From Continuing operations-

Dividend Declared on preferred stock)Number of shares outstanding=( - )/ =

Loss on operations=Loss on operationsNumber of shares outstanding= / =

Loss on disposal=Loss on disposalNumber of shares outstanding= / =

P - Continued
Dickinson Company
Retained Earnings Statement
For the year ended December ,
Retained Earnings on January ,
Add: Net income

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Intermediate accounting
,
Less:
Dividends- Preferred Stock
Dividends-Common Stock

Retained Earnings on December ,

P -
Income from continuing operations before tax ( - , )
Less: Income tax @ % ( )
Income from continuing operations after tax ,
Discontinued operations
Loss from discontinued subsidiary’s operation

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Intermediate accounting
Less: Income tax @ % ( , )
Loss from subsidiary disposal
Less: Income tax ( , )
Loss from discontinued operations ( )
Income before extraordinary item ,
Extraordinary item
Gain on condemnation of property
Less: Tax ( , ) ,
Net income ,
Per share earning
Income from continuing operations ( , ) $
Loss from discontinued operations ( , ) ( . )
Net income ( , / ) $