Question

Midwest Mechandal Corporation Income Statement For the Year Ended December 31, 2016 S 35.000 125,00 G10,000 Salven Sales Discount Sales Returns and Allowance Notes Cart of Solid Gro Profit SY.OG5,000 17730 GRO SIG 15.000 Song An Selling Expen Administrative Expres Income fromoperation 4.950 xx 2,925,000 ZA XXI S 0,4-40,000 Other Ravanu Interest Income RS,000 Other EU LAL Lor Due to Storm Damage Interest Expense S s 75, 120.000 (1,40.000 S0.000 5 2.700,000 S 5.600,000 Income from continuing operation before Income tax Income Tax Expense Income from continuing operations Discontinued Operation ProTax Taclmnet Operating Laran 1. ON 15 S 400C CCC $1,400.000 Gain from Sale (Oct. 15, 2011) S50000 After TA S 2.ccxx 5 5525, Net Income S 525.000 Earnings per share: Income from continuing operations Dicendone Net Income S S Calculation for EPS. Note: This is not part of the income Statement presentation. S.CO Income from continuing operations pratomed dividende Weighted Average Common Shares Outstanding SS.COOOOO 1.000.000 Discontinued Operations Weighted Average Common Shares Outstanding 52.925 000 S 1 000 000 Net Income - Preferred Dividence Weighted Average Common Saree Outstanding SR525.000-S 1.000.000 2.93 RSS

Answer 1

Solution:

Requirement 1 MIDWEST MECHANCIAL CORPORATION Multi-Step Income Statement For the Year Ended December 31, 2018 Sales Revenue $3,50,00,000 Less: Sales Discounts $3,25,000 Less: Sales Returns and Allowances $6,10,000 Net Sales Cost of Goods Sold Gross Profit Operating Expense: Selling Expenses $49,50,000 Administrative Expenses $29,25,000 Total Operating Expenses Operating Income Other Incomes & Gains: Interest Income $85,000 $3,40,65,000 $1,77,50,000 $1,63,15,000 $78,75,000 $84,40,000 $1,50,000 $75,000 Other Expenses & Losses: Interest Expense Loss Due to Storm Damage Income Before Income Tax Less: Income Tax Expense Income from Continuing Operations Discontinued Operations: Loss from Discontinued Operations ($4,000,000 * (1 -0.35)] Gain from Sale of Discont. Business ($8,500,000 * (1 -0.35)] Net Income -$1,40,000 $83,00,000 $27,00,000 $56,00,000 -$26,00,000 $55,25,000 $29,25,000 $85,25,000 Earnings per share: Income from Continuing Operations Discontinued Operations Net Income $5.60 $2.93 $8.53

Requirement 2 MIDWEST MECHANCIAL CORPORATION Statement of Retained Earnings For the Year Ended December 31, 2018 Beginning Balance of Retained Earnings Less: Dividends - Common Add: Net Income Ending Balance of Retained Earnings $1,20,50,000 $5,00,000 $85,25,000 $2,00,75,000

$38,75,000 Requirement 3 MIDWEST MECHANCIAL CORPORATION Balance Sheet December 31, 2018 ASSETS Current Assets: Cash Accounts Receivable $31,50,000 Less: Allowance for Doubtful Accounts $70,000 Prepaid Insurance Short-term Note Receivable Inventory Total Current Assets Property, Plant & Equipment: Equipment $1,03,75,000 Less: Accumulated Depreciation - Equipment $37,80,000 Building $15,00,000 Less: Accumulated Depreciation - Building $3,50,000 Land Total Property, Plant & Equipment Long-term Investments: Long-term Investments $30,80,000 $1,00,000 $25,000 $45,00,000 $1,15,80,000 $65,95,000 $11,50,000 $5,50,000 $82,95,000 $25,00,000 Intangible Assets: Patents Goodwill Total Intangible Assets $50,00,000 $41,24,000 $91,24,000 Total Assets $3,14,99,000 $36, 74,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $36,50,000 Salaries and Wages Payable $24,000 Total Current Liabilities Long-Term Liabilities: Bonds Payable - Long Term $50,00,000 Mortgage Payable $17,50,000 Total Long-term Liabilities Total Liabilities $67,50,000 $1,04,24,000 Stockholders' Equity: Common Stock APIC (Additional Paid in Capital) Retained Earnings Total Stockholders' Equity $10,000 $9,90,000 $2,00,75,000 $2,10,75,000 Total Liabilities & Stockholders' Equity $3,14,99,000

Calculation of Earnings per share Income from continued operations - Pref. Dividends Weighted Avg. Common Shares Outstanding $5,600,000 1,000,000 = $5.60 Discontinued operations - Pref. Dividends Weighted Avg. Common Shares Outstanding $2,925,000 1,000,000 = $2.93 Net Income – Pref. Dividends Weighted Avg. Common Shares Outstanding $8,525,000 1,000,000 = $8.53