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    Lakewood Inc. - Calculations of financial points of interest

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    The trial balance of Lakewood Inc. included the following accounts as of December 31, 2006:
    Debits Credits
    Sales revenue 1,800,000
    Interest revenue 80,000
    Gain on sale of land (infrequent but not unusual item) 50,000
    Loss on expropriated foreign assets (event
    is unusual and infrequent) 300,000
    Cost of goods sold 1,100,000
    Salaries and wages expense 220,000
    Write-off of obsolete equipment 30,000
    Depreciation expense 150,000
    Interest expense 40,000
    Marketing and administrative expenses 50,000

    Lakewood Inc. had 100,000 shares of stock outstanding throughout the year. Lakewood Inc. is subject to a 30% tax rate.

    Calculate the following and show the computations.
    a. Gross profit
    b. Operating income
    c. Income before income taxes and extraordinary item
    d. Net income
    e. Earnings per share disclosures on the income statement

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    Solution Preview

    Please see the attached file.

    Calculate the following and show the computations.
    a. Gross profit 700,000
    b. Operating income 250,000
    c. Income before income taxes and extraordinary item 340,000
    d. Net income 28,000
    e. Earnings per share disclosures on the income statement 28,000/100,000 = 0.28 per share

    Lakewood Inc.
    Income Statement
    For the year ending ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate the following and show the computations for gross profit, operating income, income before income taxes and extraordinary item, net income, and earnings per share disclosures on the income statement.

    $2.19

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