1.For Rondelli Company, the following information is available: Cost of goods so
ID: 2378345 • Letter: 1
Question
1.For Rondelli Company, the following information is available:
Cost of goods sold $270,000
Dividend revenue 12,000
Income tax expense 27,000
Operating expenses 105,000
Sales revenue 450,000
In Rondelli's multiple-step income statement, gross profit
a.
should not be reported
b.
should be reported at $60,000.
c.
should be reported at $180,000.
d.
should be reported at $192,000.
2.If plant assets of a manufacturing company are sold at a gain of $1,640,000 less related taxes of $500,000, and the gain is not considered unusual or infrequent, the income statement for the period would disclose these effects as
a.
a gain of $1,640,000 and an increase in income tax expense of $500,000.
b.
operating income net of applicable taxes, $1,140,000.
c.
a prior period adjustment net of applicable taxes, $1,140,000.
d.
an extraordinary item net of applicable taxes, $1,140,000.
3.A review of the December 31, 2012, financial statements of Somer Corporation revealed that under the caption "extraordinary losses," Somer reported a total of $1,030,000. Further analysis revealed that the $1,030,000 in losses was comprised of the following items:
(1) Somer recorded a loss of $300,000 incurred in the abandonment of equipment formerly used in the business.
(2) In an unusual and infrequent occurrence, a loss of $500,000 was sustained as a result of hurricane damage to a warehouse.
(3) During 2012, several factories were shut down during a major strike by employees, resulting in a loss of $170,000.
(4) Uncollectible accounts receivable of $60,000 were written off as uncollectible.
Ignoring income taxes, what amount of loss should Somer report as extraordinary on its 2012 income statement?
a.
$300,000.
b.
$500,000.
c.
$800,000.
d.
$1,030,000.
4.During 2012, Lopez Corporation disposed of Pine Division, a major component of its business. Lopez realized a gain of $1,800,000, net of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were $2,100,000 in 2012. How should these facts be reported in Lopez's income statement for 2012?
Total Amount to be Included in
a.
Income from Results of
Continuing Operations Discontinued Operations
$2,100,000 loss $1,800,000 gain
b.
Income from Results of
Continuing Operations Discontinued Operations
300,000 loss 0
c.
Income from Results of
Continuing Operations Discontinued Operations
0 300,000 loss
d.
Income from Results of
Continuing Operations Discontinued Operations
1,800,000 gain 2,100,000 loss
5.Benedict Corporation reports the following information:
Net income $750,000
Dividends on common stock 210,000
Dividends on preferred stock 90,000
Weighted average common shares outstanding 100,000
Benedict should report earnings per share of
a.
$4.50.
b.
$5.40
c.
$6.60.
d.
$7.50.
Explanation / Answer
1.should be reported at $180,000.
2.a gain of $1,640,000 and an increase in income tax expense of $500,000.
3.500000
4.d.
Income from Results of
Continuing Operations Discontinued Operations
1,800,000 gain 2,100,000 loss
5.Income for equity shareholder=750000-90000=660000
EPS=660000/100000=$6.6
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