Emerging Enterprises Corporation's capital structure consists of 40,000 common shares. At December 31, 2016 an analysis of the accounts and discussions with company officials revealed the following information:
Sales $2,400,000
Purchase discounts 36,000
Purchases 1,440,000
Earthquake loss (net of $36,000 tax) 84,000
Selling expenses 256,000
Cash 120,000
Accounts receivable 180,000
Common shares 400,000
Accumulated depreciation 360,000
Dividend revenue 36,000
Inventory, January 1, 2016 304,000
Inventory, December 31, 2016 250,000
Unearned service revenue 8,800
Accrued interest payable 2,000
Land 740,000
Patents 200,000
Retained earnings, January 1, 2016 540,000
Interest expense 34,000
Cumulative effect of change from straight-line to accelerated
depreciation (net of $30,000 tax) 70,000
General and administrative expenses 320,000
Dividends declared 58,000
Allowance for doubtful accounts 10,000
Notes payable (maturity July 1, 2017) 400,000
Machinery and equipment 900,000
Materials and supplies 80,000
Accounts payable 120,000
Accumulated other comprehensive income, January 1, 2016 …… 130,000
The assistant has not yet made entries for the following:
Depreciation expense (80% selling and 20% administration)………..120,000
Supplies expense (70% administration, 30% selling) ………………… 40,000
Unrealized gain FV-NI investments ……………………………………. 30,000
Unrealized gain FV-OCI investments …………………………………. 130,000
Unless indicated otherwise, you may assume a 30% income tax rate.
Instructions
a) Prepare, in good form, a multiple-step income statement. Show Earnings per share.
b) Prepare, in good form, a partial statement of Changes in Shareholder’s equity that includes columns for retained earnings and Accumulated other comprehensive income (AOCI).