In: Accounting
Selected information for Muffin’s Muffins Inc. for 2017 is presented below. All amounts are pretax. The effective tax rate is 30% . ( USGAAP)
Gain on sale of land 193,400
Selling expenses 287,600
Accounts receivable, net 632,900
Cumulative increase in income for reduced estimate of bad debts from 3.5% to 2.25% 71,800
Sales 5,130,000
Accumulated depreciation 1,526,300
Administrative expenses 387,600
Loss from operations of discontinued line of business $ 365,000
Dividend Income 58,000
Common stock, 240,000 shares 10,172,300
Interest expense 144,200
Unrealized holding loss on available-for-sales securities 171,300
Cumulative decrease in income from change in depreciation method 104,600
Inventory 3,029,000
Loss due to flooding 293,000
Gain on disposal of discontinued line of business 183,200
Retained earnings, beg balance 3,067,900
Failed to recognize interest on investment in 2016 114,800
Foreign currency translation gain 93,700
Bonds Payable 1,875,000
Accumulated other comprehensive income (CR bal) 749,120
Cumulative increase in income of change from FIFO to weighted average 63,600
Cost of goods sold 2,905,000
Dividends declared 129,500
Based on the above information, answer the following questions.
What is the balance in accumulated other comprehensive income as of 12/31/17 and on which financial statement(s) is it reported? (THINK!)
On which financial statement(s) and in which section(s) would the adjustment for reduced estimate for bad debts be reported?
What amount would appear on a post-closing trial balance for Retained Earnings?
Prepare the earnings per share section of the 2017 income statement.
1. Accumulated Other comprehensive income: This is shown in Balance sheet under Equity
Accumulated other comprehensive income as of 1/1 (Cr Bal) | 749,120 |
-Unrealized holding loss on available-for-sales securities | 171,300 |
+Foreign currency translation gain | 93,700 |
Accumulated other comprehensive income as of 12/31 (Cr Bal) | 671,520 |
2. This will be a part of bad debt expense calculation and hence
shown in profit and loss. But its directly reported on balance
sheet, current assets section as a deduction from Accounts
receivableReduced estimate for bad debts:
3. Retained earnings:
Sales |
5,130,000 |
Cost of goods sold |
2,905,000 |
Gross Profit |
2,225,000 |
Selling expenses |
287,600 |
Administrative expenses |
387,600 |
Interest expense |
144,200 |
Total operating expenses |
819,400 |
Net Operating Income |
1,405,600 |
Loss due to flooding |
(293,000) |
Gain on sale of land |
193,400 |
Dividend income |
58,000 |
Net Income |
1,364,000 |
Income tax @30% |
409,200 |
Net income from continuing operations (a) |
954,800 |
Gain/ Loss from Discontinued operations |
|
Loss from operations of discontinued line of business |
(365,000) |
Gain on disposal of discontinued line of business |
183,200 |
Gain/ Loss from Discontinued operations |
(181,800) |
Gain/ Loss from Discontinued operations, net of tax (b) |
(127,260) |
Other comprehensive Income |
|
Unrealized holding loss on available-for-sales securities |
(171,300) |
Foreign currency translation gain |
93700 |
Other comprehensive Income |
(77,600) |
Other comprehensive Income, net of tax ( c ) |
(23,280) |
Total Comprehensive Income (a+b+c) |
804,260 |
Retained earnings, beg balance |
3,067,900 |
+ Interest on investment 2016 |
114,800 |
Cumulative increase in income for reduced estimate of bad debts from 3.5% to 2.25% |
71,800 |
Cumulative decrease in income from change in depreciation method |
(104,600) |
Cumulative increase in income of change from FIFO to weighted average |
63,600 |
Adjusted Retained earnings |
3,213,500 |
Net Income (a+b) |
827,540 |
Dividends declared |
(129,500) |
Retained earnings, ending balance |
3,911,540 |
4.
EPS = Net income / Weighted avg outstanding shares | 3.45 |
Net income | 827,540 |
Weighted avg outstanding shares | 240,000 |