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Student Name:

Class:
Problem 04-01

REED COMPANY
Comparative Income Statements
for the Years Ended December 31

2016 2015
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Administrative
Selling
Loss from fire damage
Loss from write-down of obsolete inventory
Total operating expenses
Operating income
Other income (expense):
Interest revenue
Interest expense
Total other expenses (net)
Income from continuing operations before
income taxes
Income tax expense
Income from continuing operations
Discontinued operations:
Income (loss) from operations of discontinued
component (including loss on disposal of
$50,000 in 2016)
Income tax benefit (expense)
Income (loss) on discontinued operations
Net income

Earnings per share: 300,000 shares


Income from continuing operations
Discontinued operations
Net income
Given Data P04-01:

REED COMPANY
December 31

2016 2015
Sales $ 4,400,000 $ 3,500,000
Cost of goods sold 2,860,000 2,000,000
Administrative expenses 800,000 675,000
Selling expenses 360,000 312,000
Interest revenue 150,000 140,000
Interest expense 200,000 200,000
Loss on sale of assets of discontinued component 50,000 -

1/1/13 -
Results of operations for discontinued component (included above): 9/30/16 2015
Sales $ 400,000 $ 500,000
Cost of goods sold (290,000) (320,000)
Administrative expense (50,000) (40,000)
Selling expenses (20,000) (30,000)
Operating income before taxes $ 40,000 $ 110,000

Additional information:
Uninsured damage due to fire $ 50,000
Cost of obsolete inventory $ 40,000
Obsolete inventory sold for scrap $ 5,000
Income tax rate 40%
Common stock shares 300,000
Student Name:
Class:
Problem 04-05

ALEXIAN SYSTEMS, INC.


Income Statement
For the Year Ended December 31, 2016

($ in millions, except earnings per share)


Net sales revenue
Cost of goods sold
Gross profit

Operating expenses:
Selling and administrative
Restructuring costs
Total operating expenses
Operating income

Other income:
Interest revenue
Gain on sale of investments
Total other income
Income from continuing operations before
income taxes
Income tax expense
Discontinued operations
Income from operations of discontinued
component
Income tax expense
Income on discontinued operations
Net income

Earnings per share: 20 shares


Income from continuing operations
Discontinued operations
Net income
Given Data P04-05:

ALEXIAN SYSTEMS, INC.


Income Statement
for the Year Ended December 31, 2016
($ in millions, except earnings per share)

Revenues and gains:


Net sales $ 425
Interest 3
Other income 126
Total revenues and gains 554
Expenses:
Cost of goods sold 270
Selling and administrative 154
Income taxes 52
Total expenses 476
Net income $ 78
Earnings per share $ 3.90

Additional information ($ in millions):


Selling and administrative expenses include
restructuring costs $ 26
Other income from a discontinued operation. $ 120
Other income gain from sale of investments $ 6
Cost of goods sold increase to correct
error in 2015 ending inventory $ 5
Income tax rate 40%
Outstanding shares of common stock 20
Student Name:
Class:
Problem 04-06

REMBRANDT PAINT COMPANY


Income Statement
For the year ended December 31, 2016

($ in thousands, except per share amounts)


Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling and administrative
Restructuring costs
Operating income
Interest income (expense), net
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations
Discontinued operations:
Income from operations of discontinued component
Income tax expense
Income on discontinued operations
Net income

Earnings per share: 500 shares


Income from continuing operations before extraordinary item
Income from discontinued operations
Net income
Given Data P04-06:

REMBRANDT PAINT COMPANY

Income statement items,


year ended 12/31/2016 ($ in thousands):
Net sales $ 18,000
Interest income 200
Interest expense 350
Cost of goods sold 10,500
Selling and administrative expenses 2,500
Restructuring costs 800

Loss from operations on plastics business $ 1,600,000


Gain on disposal of component's assets $ 2,000,000
Shares of common stock outstanding in 2016 500,000
Income tax rate 30%
Student Name:
Class:
Problem 04-08

DUKE COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2016

Sales revenue
Cost of goods sold
Gross profit

Operating expenses:
General and administrative
Selling
Restructuring costs
Loss from write-down of obsolete inventory
Total operating expenses
Operating income

Other income (expense):


Interest expense
Income before income taxes
Income tax expense
Net income
Other comprehensive income (loss):
Foreign currency translation adjustment loss, net of tax
Unrealized gain on investment securities, net of tax
Total other comprehensive loss
Comprehensive income
Given Data P04-08:

DUKE COMPANY
December 31, 2016 Account Balances

Sales $ 15,000,000
Cost of goods sold $ 9,000,000
General and administrative expenses $ 1,000,000
Selling expenses $ 500,000
Interest expense $ 700,000

Additional information:
Restructuring costs due to plant closings $ 300,000
Inventory written off as obsolete $ 400,000
Understatement of 2015 depreciation expense $ 50,000
Foreign currency translation adjustment loss $ 200,000
Unrealized gain on investment securities $ 180,000
Effective tax rate 40%

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