Concept explainers
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, 2017.
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
2017 | |
Particulars | 1st 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
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, 2017
2017 | |
Particulars | |
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
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:
2017 | |||
Particulars | 1st Q | 2nd Q | Consolidated 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 CONNECT ACCESS >I<
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