Advanced Accounting (Looseleaf)
Advanced Accounting (Looseleaf)
12th Edition
ISBN: 9780077632595
Author: Hoyle
Publisher: MCG
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Chapter 8, Problem 40P
To determine

Prepare a schedule showing the calculation of net income and earnings per share that company C’s reports for the three-month period and the six-month period ended June 30, 2015.

Expert Solution & Answer
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Answer to Problem 40P

Net income for three month period is $4,440 and earnings per share are $4.44 and net income for six month period is $9,000 and earnings per share are $9.

Explanation of Solution

A schedule showing the calculation of net income and earnings per share that company C reports for the three-month period

 2015
Particulars1st Q
  
Sales $      18,000
Less: Cost of goods sold $        7,400
Gross profit $      10,600
Less: Operating expenses $        3,200
Income before income taxes $        7,400
Income taxes (40%) $        2,960
Net income $        4,440

Table: (1)

Earnings per share for three month period

Earningspershare for three month period=NetincomePreferreddividendsAveragecommonsharesoutstanding=$4,440$01,000=$4,4401,000=$4.44

Thus, Earnings per share for three month period is $4.44

A schedule showing the calculation of net income and earnings per share that company C reports for the six-month period ended June 30, 2015

 2015
Particulars1st Q + 2nd Q
  
Sales $         38,000
Less: Cost of goods sold $         16,400
Gross profit $         21,600
Less: Operating expenses $           6,600
Income before income taxes $         15,000
Income taxes (40%) $           6,000
Net income $           9,000

Table: (2)

Earnings per share for six month period

Earningspershareforsixmonthperiod=NetincomePreferreddividendsAveragecommonsharesoutstanding=$9,000$01,000=$9,0001,000=$9

Thus, earnings per share for six month period is $9

Working note

Schedule showing calculation of net income that company C reports for the two quarters:

 2015
Particulars1st Q2nd QConsolidated balance
    
Sales $      18,000 $           20,000 $                      38,000
Less: Cost of goods sold $        7,400 $             9,000 $                      16,400
Gross profit $      10,600 $           11,000 $                      21,600
Less: Operating expenses $        3,200 $             3,400 $                        6,600
Income before income taxes $        7,400 $             7,600 $                      15,000
Income taxes (40%) $        2,960 $             3,040 $                        6,000
Net income $        4,440 $             4,560 $                        9,000

Table: (3)

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Chapter 8 Solutions

Advanced Accounting (Looseleaf)

Ch. 8 - Prob. 11QCh. 8 - To satisfy geographic area disclosure...Ch. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Prob. 16QCh. 8 - Prob. 17QCh. 8 - How does a company determine the amount of income...Ch. 8 - Prob. 19QCh. 8 - Prob. 20QCh. 8 - What type of segment information must companies...Ch. 8 - How would an annual bonus paid at year-end be...Ch. 8 - Which of the following does U.S. GAAP not consider...Ch. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Which of the following is not necessarily true for...Ch. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Which of the following items is required to be...Ch. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - In considering interim financial reporting, how...Ch. 8 - How should material seasonal variations in revenue...Ch. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Niceville Company pays property taxes of 100,000...Ch. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Noventis Corporation prepared the following...Ch. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 5DYSCh. 8 - ACCOUNTING STANDARDS CASE 1SEGMENT REPORTING...Ch. 8 - ACCOUNTING STANDARDS CASE 2INTERIM REPORTING...Ch. 8 - Prob. 8DYSCh. 8 - Prob. 9DYS
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