ms PIZ1 Teruya Corporation provided the following relevant information for its f

ID: 2429765 • Letter: M

Question

ms PIZ1 Teruya Corporation provided the following relevant information for its fiscal year ending September 30, LO1 2015: Sales Cost of goods sold Sales returns Depreciation on sales equipment Sales commissions Sales salaries Administrative salaries Depreciation on office equipment Bond interest expense Selling expenses Administrative expense Loss on disposal of marine products division Marine products division operating income Dividend income Entertainment expense Dividends declared on preferred stock $1,950,000 1,231,600 41,000 6,500 103,000 62,300 98,200 8,500 22,000 168,900 134,600 80,000 4,000 23,100 10,000 On October 1, 2014, Teruya's retained earnings balance was $238,790. The tax rate for Teruya Corpora- tion is 20 percent. There are 50,000 shares of common stock outstanding. Required: A. Prepare a multistep income statement for fiscal 2015 B. Calculate the earnings per share for 2015.

Explanation / Answer

( A) Income Statement

Teruya Corporation

Statement of Profit & Loss for the year ended 30th September 2015

Particulars

Amount($)

Income

Sales

1,950,000

Less: Sales Returns

41,000

Net Sales

1,909,000

Dividend Income

4000

Income from Marine Products Division

100,000

TOTAL (A)

2,013,000

Expenses

Cost of Goods Sold

1,231,600

Administrative Salaries

98,200

Administrative Expenses

134,600

Sales Salaries

62,300

Sales Commissions

103,000

Selling Expenses

168,900

Bond Interest Expenses

22,000

Entertainment Expenses

23,100

Loss on disposal of Marine Products Division

80,000

Depreciation :

On Sales Equipment

6,500

On Office Equipment

8,500

15,000

TOTAL (B )

1,938,700

Profit Before Tax (A- B )

74,300

Less: Tax @ 20%

14860

Profit After Tax

59440

Add : Balance of account as per last Balance Sheet

238,790

298,230

Less: Dividend declared on Preference Stock

10,000

Surplus Carried to Balance Sheet

288,230

(B ) Earnings Per Share for 2015

Earnings Per Share (EPS) = (Net Profit After Tax-Preferred Dividends) / (Weighted Average

number of common shares outstanding)

= ($ 59440- $10000)/50000 shares

= $ 0.9888/ Share