SUNY Canton Canton, New York 13617 Intermediate Aecounting I Intermediate Accoun

Question

SUNY Canton Canton, New York 13617 Intermediate Aecounting I Intermediate Accounting I Name: Professor D. Fay The Sutton Forest Products Company had sales during 2014 of $1,200,000. Sutton operates at a gross profit of 50%. Purchases of inventory during 2014 totaled$675,000 and ending inventory totaled $210,500. Selling expenses were 20% of sales and general and administrative expenses were 75% of the selling expenses. Sutton's tax rate is 40% and the company has 50,000 shares of common stock outstanding. Prepare an income statement for Sutton Forest Products, including earnings per share data, for the year ended December 31, 2014

Explanation / Answer

Earning per share = net income/total shares

Opening stock          135,500 Sales          1,200,000 Purchases          675,000 Ending inventory              210,500 Gross profit          600,000 Selling expenses @ 20%          240,000 General and administrative expenses          180,000 Income before tax          180,000 Tax @ 40%            72,000 Net Income          108,000 Total shares            50,000 Earning per share                 2.16

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