No dividends were declared. However, 660 shares issued at the end of the year fo

Question

No dividends were declared. However, 660 shares issued at the end of the year for $3,000 are included below: Debit Credit Cash $ 1,640 Accounts receivable 2,360 Interest receivable 270 Prepaid insurance 1,660 Notes receivable (long-term) 2,970 Equipment 16,900 Accumulated depreciation $ 2,870 Accounts payable 2,290 Accrued expenses payable 3,760 Income taxes payable 2,560 Unearned rent revenue 330 Contributed capital (940 shares) 3,500 Retained earnings 5,770 Sales revenue 36,850 Interest revenue 190 Rent revenue 710 Wages expense 18,300 Depreciation expense 1,800 Utilities expense 350 Insurance expense 790 Rent expense 9,000 Income tax expense 2,790 Total $ 58,830 $ 58,830 Prepare a multi-step income statement for 2012. Include earnings per share.

Explanation / Answer

follow thisTarget Sales Volume (in dollars) = Fixed Costs + Target Operating Income 10. Contribution Margin Ratio = $145,000 + $30,000 .35 = $500,000 per month 11. At the break-even point, a company earns a total contribution margin exactly equal to its fixed costs. By dividing the unit contribution margin into this required total contribution margin, we can determine the number of units that must be sold to enable the company to cover its fixed costs. 12. If the contribution margin ratio is 35%, variable costs must account for the other 65% of total revenue. If 65% of total revenue is equal to $26 per unit, the unit sales price must be $26

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