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Income Statement Preparation - Beckstrom Corporation

The following selected information is taken from the records of Beckstrom Corporation.
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . 65,000
Advertising expense . . . . . . . . . . . . . . . . . . . . . . 15,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,500
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . 46,000
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Income taxes (30% of income before taxes) . . . . ?
Miscellaneous expense . . . . . . . . . . . . . . . . . . . . 4,400
Owners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . 61,000
Fees (revenues) . . . . . . . . . . . . . . . . . . . . . . . . . 384,000
1. Prepare an income statement for the year ended December 31, 2006. (Assume that 7,500
shares of stock are outstanding.)
2. Explain what the EPS ratio tells the reader about Beckstrom Corporation.

Solution Preview

Income Statement Preparation
The following selected information is taken from the records of Beckstrom Corporation.
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . 65,000
Advertising expense . . . . . . . . . . . . . . . . . . . . . . 15,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,500
Supplies ...

Solution Summary

This solution is to prepare an income statement for the year ended December 31, 2006 and explain what the EPS ratio tells the reader about Beckstrom Corporation.

$2.19