Question

In: Accounting

1. An inexperienced accountant for Martinez Corp. showed the following in the income statement: net income...

1. An inexperienced accountant for Martinez Corp. showed the following in the income statement: net income $215,970 and unrealized gain on available-for-sale securities (before taxes) $93,000. The unrealized gain on available-for-sale securities subject to a 31% tax rate.

Prepare a correct statement of comprehensive income.

MARTINEZ CORP.
Partial Statement of Comprehensive Income

select a comprehensive income item                                                          DividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeUnrealized Loss on Available-for-Sale Securities

$enter a dollar amount

select an opening section name                                                          DividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeUnrealized Loss on Available-for-Sale Securities

select a comprehensive income item                                                          DividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive IncomeGain on Available-for-Sale Securities

enter a dollar amount

select a  closing name for this statement                                                          DividendsExpensesNet Income / (Loss)Retained EarningsRevenueTotal ExpensesTotal RevenuesIncome Tax ExpenseOther Comprehensive IncomeUnrealized Holding Gain on Available-for-Sale SecuritiesIncome Before Income TaxesComprehensive Income

$enter a total amount for this statement

2. For its fiscal year ending October 31, 2022, Indigo Corporation reports the following partial data.

Income before income taxes

$624,000

Income tax expense (24% × $471,000)

113,040

Income from continuing operations

510,960

Loss on discontinued operations

117,900

Net income

$393,060


The loss on discontinued operations was comprised of a $38,200 loss from operations and a $79,700 loss from disposal. The income tax rate is 24% on all items.

Prepare a correct partial income statement beginning with income before income taxes.

INDIGO CORPORATION
Partial Income Statement

choose the accounting period                                                          For the Month Ended October 31, 2022For the Year Ended October 31, 2022October 31, 2022

select an income statement item                                                          ExpensesDiscontinued OperationsLoss on DisposalRevenueIncome from Continuing OperationsRetained EarningsLoss from OperationsNet Income / (Loss)Other Comprehensive IncomeTotal RevenuesIncome Tax ExpenseTotal ExpensesIncome Before Income TaxesDividendsComprehensive IncomeUnrealized Holding Loss of Available-for-Sale Securities

$enter a dollar amount

select an income statement item                                                          ExpensesTotal ExpensesIncome Before Income TaxesRetained EarningsUnrealized Holding Loss of Available-for-Sale SecuritiesComprehensive IncomeRevenueIncome Tax ExpenseLoss from OperationsNet Income / (Loss)Income from Continuing OperationsLoss on DisposalTotal RevenuesOther Comprehensive IncomeDiscontinued OperationsDividends

enter a dollar amount

select a summarizing line for the first part                                                          ExpensesNet Income / (Loss)Loss from OperationsRevenueIncome Tax ExpenseTotal RevenuesRetained EarningsOther Comprehensive IncomeDividendsLoss on DisposalUnrealized Holding Loss of Available-for-Sale SecuritiesDiscontinued OperationsComprehensive IncomeTotal ExpensesIncome from Continuing OperationsIncome Before Income Taxes

enter a total amount for the first part

select an opening section name                                                          Loss on DisposalNet Income / (Loss)ExpensesComprehensive IncomeDividendsDiscontinued OperationsIncome from Continuing OperationsRetained EarningsRevenueOther Comprehensive IncomeTotal RevenuesIncome Tax ExpenseTotal ExpensesLoss from OperationsUnrealized Holding Loss of Available-for-Sale SecuritiesIncome Before Income Taxes

select an income statement item                                                          Income from Continuing OperationsDiscontinued OperationsIncome Tax ExpenseComprehensive IncomeRevenueRetained EarningsIncome Before Income TaxesOther Comprehensive IncomeUnrealized Holding Loss of Available-for-Sale SecuritiesExpensesNet Income / (Loss)DividendsTotal RevenuesLoss from OperationsTotal ExpensesLoss on Disposal

$enter a dollar amount

select an income statement item                                                          DividendsLoss on DisposalRevenueDiscontinued OperationsUnrealized Holding Loss of Available-for-Sale SecuritiesTotal ExpensesIncome from Continuing OperationsTotal RevenuesNet Income / (Loss)Other Comprehensive IncomeIncome Tax ExpenseIncome Before Income TaxesLoss from OperationsComprehensive IncomeRetained EarningsExpenses

enter a dollar amount

enter a subtotal of the two previous amounts

select a closing name for this statement                                                          Income Before Income TaxesLoss from OperationsIncome from Continuing OperationsOther Comprehensive IncomeDividendsIncome Tax ExpenseTotal RevenuesComprehensive IncomeUnrealized Holding Loss of Available-for-Sale SecuritiesRetained EarningsExpensesRevenueLoss on DisposalDiscontinued OperationsTotal ExpensesNet Income / (Loss)

$enter a total net income or loss amount

3. Here is the income statement for Marin Inc.

MARIN INC.
Income Statement
For the Year Ended December 31, 2022

Sales revenue

$425,500

Cost of goods sold

240,400

Gross profit

185,100

Expenses (including $12,000 interest and $26,000 income taxes)

75,420

Net income

$ 109,680


Additional information:

1. Common stock outstanding January 1, 2022, was 26,300 shares, and 36,100 shares were outstanding at December 31, 2022.
2. The market price of Marin stock was $13.94 in 2022.
3. Cash dividends of $25,536 were paid, $3,600 of which were to preferred stockholders.


Compute the following measures for 2022. (Round earnings per share to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%)

(a)

Earnings per share

$Enter earnings per share in dollars rounded to 2 decimal places

(b)

Price-earnings ratio

Enter price-earnings ratio in times rounded to 1 decimal place

times

(c)

Payout ratio

Enter payout ratio in percentages rounded to 1 decimal place

%

(d)

Times interest earned

Enter times interest earned rounded to 1 decimal place

times

Solutions

Expert Solution

Answer:

1)

MARTINZ CORP
Partial Statement of Comprehensive Income
Income Before Income Taxes 215970
Income Tax Expense 93000
Net Income 122970
Other Comprehensive Income
Unrealized Holding Gain on Available for Sale Securities 46196
Comprehensive Income 169166

Working notes:

Income tax expenses = 215970*31% = 66951
Unrealized Holding Gain on Available for Sale Securities = 66951*(100%-31%) = 46196

2.)

INDIGO CORP
Partial Statement of Comprehensive Income
For the Year Ended October 31, 2019
Income before Income Taxes 624000
Income Taxes Expenses 149760
Income from Continuing Operations 474240
Discounted Operations
Loss from Operations 29032
Loss from Disposal 60572 89604
Net Income / (Loss) 384636

Working Notes:

Income Tax expense = 624000*24% = 149760
Loss from operations = 38200-(38200*24%) = 29032
Loss on disposal = 79700-(79700*24%) = 60572

3.)

(a) Earnings per share= (Net Income - preferred dividend) / Weighted average shares outstanding

= (109680 $ - 3600 $)/ {(26300+36100)/2}

= 106080/31200

=3.4 $ per share

(b) Price Earning Ratio= Market price/ EPS

= 13.94/3.4 = 4.1 times

(c) Payout ratio= Total Dividend/ Net Income

= (25536$ - 3600)/ 109680 $= 0.2 times or 20%

(d) Times Interest earned= Income before interest expense and tax / Interest expense

= (109680 $ + 12000 $+ 26000 $) / 12000 $=

= 12.31 times


Related Solutions

An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income...
An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income taxes $359,000 and unrealized gain on available-for-sale securities (before taxes) $88,800. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 28% tax rate. Prepare a correct statement of comprehensive income.
Income Statement An inexperienced accountant for Prestwick Company prepared the following income statement for the month...
Income Statement An inexperienced accountant for Prestwick Company prepared the following income statement for the month of August, current year. PRESTWICK COMPANY AUGUST 31, CURRENT YEAR Revenues:  Services provided to customers $17,000  Investment by stockholders 5,000  Loan from bank  15,000 $37,000 Expenses:  Payments to long-term creditors $11,700  Expenses required to provide   services to customers 7,800  Purchase of land  16,000   35,500 Net income $  1,500 Statement of Cash Flows Prepare a revised income statement in accordance with generally accepted accounting principles....
Below is Salem Company’s income statement for 2018 that was prepared by an inexperienced accountant. Salem...
Below is Salem Company’s income statement for 2018 that was prepared by an inexperienced accountant. Salem Company Income Statement As of December 31, 2018 Revenues: Sales revenue ……………..…………………………………… $298,000 Wages payable…………..……………………………………….. 4,000 Gain on sale of investment…………………………………….. 5,250 Deferred revenue………………………………………………. 2,500 Interest payable………………………………………………… 1,000 Accumulated depreciation……………………………………… 10,000 Total revenues ………………………………………………….. $320,750 Less operating expenses: Selling expenses….……………………… …………………. $32,250 Research and development expense………………….…….. 4,750 Prepaid advertising …….…………………………………. 3,000 Indirect manufacturing labor cost..………………………… 16,200 Utilities expense..…. .....................………………………… 10,200 Direct manufacturing labor cost....
An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has...
An inexperienced accountant prepared this condensed income statement for Simon Company, a retail firm that has been in business for a number of years. SIMON COMPANY Income Statement For the Year Ended December 31, 2017 Prepare a correct multiple-step income statement. Revenues Net sales $850,000 Other revenues 22,000 Cost of goods sold 555,000 Gross profit 317,000 Operating expenses Selling expenses 109,000 Administrative expenses 103,000 Net earnings $105,000 As an experienced, knowledgeable accountant, you review the statement and determine the following...
A company's income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on...
A company's income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on sale of plant assets, $14,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities. Select one: a. $155,000. b. $145,800. c. $141,000. d. $139,000. Please Solve As...
A company's income statement showed the following: net income, $135,400; depreciation expense, $32,700, and gain on...
A company's income statement showed the following: net income, $135,400; depreciation expense, $32,700, and gain on sale of plant assets, $15,350. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,300; merchandise inventory increased $19,800; prepaid expenses decreased $7,100; accounts payable increased $4,000. Calculate the net cash provided or used by operating activities.
A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on...
A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities. Multiple Choice $176,600. $155,400. $148,600. $150,600. $135,800. In preparing a company's statement of cash flows using the indirect method,...
A company's income statement showed the following: net income, $134,000; depreciation expense, $40,000; and gain on...
A company's income statement showed the following: net income, $134,000; depreciation expense, $40,000; and gain on sale of plant assets, $14,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,400; merchandise inventory increased $28,000; prepaid expenses increased $8,200; accounts payable increased $5,400. Calculate the net cash provided or used by operating activities. Multiple Choice $140,600. $183,000. $157,000. $155,000. $161,800.
A company's income statement showed the following: net income, $127,000 and depreciation expense, $30,900. An examination...
A company's income statement showed the following: net income, $127,000 and depreciation expense, $30,900. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $9700; merchandise inventory increased $18,600; and accounts payable increased $3700. Calculate the net cash provided or used by operating activities.
A company's income statement showed the following: net income, $127,000; depreciation expense, $36,500; and gain on...
A company's income statement showed the following: net income, $127,000; depreciation expense, $36,500; and gain on sale of plant assets, $10,500. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,700; merchandise inventory increased $24,500; prepaid expenses increased $7,500; accounts payable increased $4,700. Calculate the net cash provided or used by operating activities. Multiple Choice $177,400. $156,200. $149,400. $151,400.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT