Income Statement and Retained Earnings
Response to the following problem:
The Senger Company presents the following partial list of account balances taken from its December 31, 2010 adjusted trial balance:
|
Sales (net)
|
$124,000
|
Operating expenses
|
$30,400
|
|
Interest expense
|
3,700
|
Common stock, $5 par
|
22,000
|
|
Cost Of goods sold
|
66,200
|
Retained earning , 1/1/2010
|
45,800
|
The following information is also available for 2010 and is not reflected in the preceding accounts:
1. The common stock has been outstanding all year. A cash dividend of $1.28 per share was declared and paid.
2. Land was sold at a pretax gain of $6,300.
3. Division X (a component of the company) was sold at a pretax gain of $4,700. It had incurred a $9,500 pretax operating loss during 2010.
4. A tornado, which is an unusual and infrequent event in the area, caused a $5,400 pretax loss.
5. The income tax rate on all items of income is 30%.
6. The average stockholders' equity is $90,000.
Required
1. Prepare a 2010 multiple-step income statement for Senger Company.
2. Prepare a 2010 retained earnings statement.
3. Compute the 2010 return on stockholders' equity (net income ÷ average stockholders' equity).