Problem 3: Earnings per Share and Adjusting Entries (12 points) 1. The following

Question

Problem 3: Earnings per Share and Adjusting Entries (12 points) 1. The following information (in millions of dollars) is available for Kline Sportswear for 2012: Sales revenue $6,300 Net income Preferred stock dividend $504.6 $0 Stock price per share $18.45 Average shares outstanding 336.4 million Compute the earnings per share for Kline Sportswear. Before month-end adjustments are made, the September 30 trial balance of Horton Enterprise contains revenue of $9,200 and expenses of $6,300. Adjustments are necessary for the following items: 2. . Depreciation for September is $300 . Revenue earned but not yet billed is $2,100. . Accrued interest expense is $800. Revenue collected in advance that is now earned is $3,400. Portion of prepaid insurance expired during September is $300. . Calculate the correct net income for Horton's Enterprise for September. (Show all of your work for partial credit).

Explanation / Answer

Ans. (1) Earning per share = Net Income / Average shares outstanding = $504.6 / 336.4 (in Millions) = $           1.50 Ans. (2) Horton's Enterprises Net Income Statement Particulars Amt.($) Revenue Earned 9,200 Adv. Revenue now earned 3,400 Unbilled Revenue 300      Total revenue $12,900 Less: Expenses 6,300 Depreciation 300 Accrued Interest expense 800 Insurance expense 300 Net Income $5,200

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