Question

Income Statement and #1. Mutti-step Retained Earry statement. were included in the trial balance of Twain Corporation at June 30, 5019 The following account balances Sales revenue $1,578,500 Depreciation expense (office Sales discounts 31,150 furniture and equipment) Cost of goods sold $ 7,250 896,770 Property tax expense 7,320 Salaries and wages expense (sales) 56,260 Bad debt expense (selling) 4,850 Sales commissions 97,600 Maintenance and repairs Travel expense (salespersons) 28,930 expense administration) 9,130 Delivery expense 21.400 Office expense 6,000 Entertainment expense 14,820 Sales returns and allowances 62,300 Telephone and Internet expense (sales) 9,030 Dividends received 38,000 Depreciation expense (sales equipment) 4,980 Interest expense 18,000 Maintenance and repairs expense (sales) 6,200 Income tax experise 102,000 Miscellaneous selling expenses 4,715 Depreciation understatement Office supplies used 3.450 due to error-2014 (net of tax) 17,700 Telephone and Internet expense Dividends declared on (administration) 2,820 preferred stock 9,000 Dividends declared on common stock 37,000 The Retained Earnings account had a balance of $337,000 at July 1,401 There are 80,000 shares of common stock outstanding. Instructions Using the multiple-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2019 • Calculate Earnings per Shase (Eps). as can be broken down into separate sections.

Answer 1

Twain Corporation Statement of Income For the year ended 30.6.2019 Sales Revenue Sales Discount Sales Returns and Allowances Net Sales Cost of goods sold Gross Profit 1578500 -31150 -62300 1485050 896770 588280 Statement of Retained Earings For the year ended 30.6.2019 Balance as at 31.7.2018 Correction of depreciation understatement, net of tax Balance as at 31.7.2018 as adjusted Add:Net Income 337000 -17700 319300 221525 540825 Less: Dividends declared on preferred stock Dividends declared on common stock Balance as at 30.6.2019 -9000 -37000 494825 Operating Expenses: Selling Expenses Sales Commission Salaries and Wages Expense Travel Expense Freight Out Entertainment Expense Telephone and Internet Expense Maintenance and Repair Expense Depreciation Expense Bad Debt Expense Missc. Selling Expense 97600 56260 28930 21400 14820 9030 6200 4980 4850 4715 248785 Administrative Expense: Maintenance and Repair Expense Property Tax Expense Depreciation Expense Supplies Expense Telephone and Internet Expense Miscellaneous Office Expense Income from Operations 9130 7320 7250 3450 2820 6000 35970 303525 38000 Other Revenues and gains: Dividend Revenue Other Expenses and Losses: Interest Expense Income before Income Tax Income Tax Net Income 18000 323525 102000 221525 Earnings per Common Share = (Net Income - Preferred Dividends ) / Oustanding shares = ( 221525 - 9000) / 80000 = $2.66

Kwok Company 165000 Inventory balance before additional transactions Add: Goods shipped to Kwok f.o.b. shipping point on December 28 Goods shipped to customer f.o.b. destination on December 27 Correct inventory balance 17000 22000 204000