Copyright

Romney's Marketing Company has the following adjusted trial balance at the end of the current...

Question:

Romney's Marketing Company has the following adjusted trial balance at the end of the current year. No dividends were declared. However, 700 shares ($0.10 par value per share) issued at the end of the year for $3,000 are included below:

Debit Credit
Cash $1,630
Accounts receivable 2,320
Interest receivable 160
Prepaid insurance 1,630
Notes receivable (long-term) 3,000
Equipment 15,300
Accumulated depreciation $2,900
Accounts payable 2,360
Accrued expenses payable 3,860
Income taxes payable 2,540
Unearned rent revenue 420
Common Stock (820 shares) 82
Additional paid-in capital 3,438
Retained earnings 4,010
Sales revenue 37,350
Interest revenue 140
Rent revenue 660
Wages expense 18,400
Depreciation expense 1,770
Utilities expense 410
Insurance expense 700
Rent expense 9,700
Income tax expense 2,740
Total $57,760 $57,760

Prepare a multi-step income statement in good form for the current year, Include earnings per share.

What Is Net Income:

Net Income is the final line of the company's income statement. It refers to the leftover money from sales generated in the current period after deducting all business expenses (including interest expenses and income tax).

Answer and Explanation:

See below.

Account $
Sales revenue 37,350
Interest revenue 140
Rent revenue 660
Total revenue =37,350 +140 +660 38,150
Wages expense 18,400
Depreciation expense 1,770
Utilities expense 410
Insurance expense 700
Rent expense 9,700
Total operating expenses =1770+410+700+9700 12,580
Pre-tax operating income =38,150-12,580 25,570
Income tax expense 2,740
Net income =25,570-2,740 22,830
Earnings per share Note 1 $48.57

Note 1:

Weighted average shares = (820 + (820-700))/2 = 470 shares

=22,830/470


Learn more about this topic:

Loading...
What Is Net Income? - Definition & Formula

from OSAT Business Education (CEOE) (040): Practice & Study Guide

Chapter 69 / Lesson 5
63K

Related to this Question

Explore our homework questions and answers library