The following data were taken from the records of Surf's Up Corporation for the year ended July 31, 2006:
Retained earnings and balance sheet data:
|
Accounts payable
|
$ 9,500
|
|
Accounts receivable
|
276,050
|
|
Accumulated depreciation
|
3,050,000
|
|
Accumulated other comprehensive income
|
15,000
|
|
Allowance for doubtful accounts
|
11,500
|
|
Cash
|
115,500
|
|
Common stock, $10 par (500,000 shares authorized; 251,000 shares issued)
|
2,510,000
|
|
Deferred income taxes payable (current portion, $4,700)
|
65,700
|
|
Dividends:
|
|
|
Cash dividends for common stock
|
80,000
|
|
Cash dividends for preferred stock
|
100,000
|
|
Stock dividends for common stock
|
40,000
|
|
Dividends payable
|
25,000
|
|
Employee termination benefit obligation (current)
|
90,000
|
|
Equipment
|
11,819,050
|
|
Income tax payable
|
55,900
|
|
Interest receivable
|
2,500
|
|
Merchandise inventory (July 31, 2006), at lower of cost (FIFO) or market
|
551,500
|
|
Paid-in capital from sale of Treasury stock
|
$ 5,000
|
|
Paid-in capital in excess of par-common stock
|
996,300
|
|
Paid-in capital in excess of par-preferred stock
|
240,000
|
|
Patents
|
85,000
|
|
Preferred 6-2% stock, $100 par (30,000 shares authorized; 15,000 shares issued) 1,500,000
|
|
Prepaid expenses
|
15,900
|
|
Retained earnings, August 1, 2005
|
4,231,600
|
|
Temporary investments in marketable equity securities (at cost)
|
95,000
|
|
Treasury stock (1,000 shares of common stock at cost of $40 per share)
|
40,000
|
|
Unrealized gain (net of tax) on marketable equity securities
|
15,000
|
|
Income statement data:
|
|
|
Administrative expenses
|
$ 140,000
|
|
Cost of merchandise sold
|
984,000
|
|
Gain on condemnation of land
|
30,000
|
|
Income tax:
|
|
|
Applicable to continuing operations
|
170,000
|
|
Applicable to loss from discontinued operations
|
24,000
|
|
Applicable to gain on condemnation of land
|
10,000
|
|
Interest expense
|
7,500
|
|
Interest revenue
|
1,500
|
|
Loss from disposal of discontinued operations
|
104,000
|
|
Loss from fixed asset impairment
|
60,000
|
|
Restructuring charge
|
300,000
|
|
Sales
|
2,600,000
|
|
Selling expenses
|
540,000
|
Instructions
1. Prepare a multiple-step income statement for the year ended July 31, 2006, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 250,000 and preferred dividends were $100,000. Assume that the gain on the condemnation of land is an extraordinary item.
2. Prepare a retained earnings statement for the year ended July 31, 2006.
3. Prepare a balance sheet in report form as of July 31, 2006.