Question 2 The following account balances were included in the trial balance of

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Question 2 The following account balances were included in the trial balance of Twain Corporation at June 30, 2014 Sales revenue Sales discounts Cost of goods sold Salaries and wages expense (sales) Sales commissions Travel expense (salespersons) Delivery expense Entertainment expense Telephone and Internet expense (sales) $1,594,400 31,990 905,600 56,350 97,820 38,100 21,670 14,975 9,092 Depreciation expense (office furniture and equipment) Property tax expense Bad debt expense (selling) Maintenance and repairs expense (administration) Office expense Sales returns and allowances Dividends received Interest expense Income tax expense Depreciation understatement due to error-2011 (net of tax) Dividends declared on preferred stock Dividends declared on common stock $7,309 7,356 4,944 9,232 6,026 62,560 39,500 19,800 108,900 18,600 9,100 37,400 Depreciation expense (sales equipment) 5,057 Maintenance and repairs expense (sales) Miscellaneous selling expenses Office supplies used Telephone and Internet expense (administration) 6,393 4,747 3,481 2,906 The Retained Earnings account had a balance of $340,800 at July 1, 2013. There are 79,500 shares of common stock outstanding

Explanation / Answer

TWAIN CORPORATION Income statement for the year ended june 30, 2014 $ SALES REVENUE sales revenue 1594400 less: sales discount 31990           sales returns & allowances 62560 net sales 1499850 cost of goods sold 905600 gross profit 594250 operating expense selling expense sales commission 97820 salaries & wages exp 56350 travel expenses 38100 entertainment exp 14975 delivery exp 21670 telephone & internet exp 9092 maintainance & repair exp 6393 depreciation exp 5057 bad debts exp 4944 misc selling exop 4747 259148 administration exp maintainence & repair exp 9232 property tax exp 7356 depreciation ecp 7309 supplies exp 3481 telephone & internet exp 2906 office exp 6026 36310 income from operations 298792 other revenues and gains dividend revenue 39500 other expenses & losses interest exp 19800 income before income tax 318492 income tax 108900 net income 209592 earning per common share (209592-9100)/79500 2.521912 TWAIN CORPORATION retained earning statement for the year ended june 30, 2014 $ retained earning july 1, 2013 as reported 340800 correction of depreciation understatement 18600 net of tax retained earning july 1, 2013 as adjusted 322200 add: net income 209592 531792 less: dividend declared on prefered stock 9100 less: dividend declared on equity stock 37400 retained earning june 30, 201 485292

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