Share
Explore BrainMass

Partial Income Statement

Please help me with this problem. Please provide a detailed explanation.

(Income Statement EPS) Presented below are selected ledger accounts of
McGraw Corporation as of December 31, 2010

Cash................................................$ 50,000
Administrative Expenses........................ 100,000
Selling Expenses.................................. 80,000
Net Sales........................................... 540,000
Cost of Good Sold...................................260,000
Cash Dividends declared 2007.................... 20,000
Cash Dividends paid 2007...........................15,000
Discontinued Operation (loss bf.. Inc tax).........40,000
Depreciation Expense not rec.in 2006 ..........30,000
Retained Earnings Dec. 31, 2006 .......... 90,000
Effective Tax Rate 30%..........

Instructions:
a) Compute net income for 2010
b) Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 20,000 shares of common stock were outstanding during 2010.

Solution Preview

a)

Income before taxes and discontinued operations for 2010 = Net Sales - COGS - Admin Expenses - Selling Expenses - Depreciation Expense
= 540,000 - 260,000 - 100,000 - ...

Solution Summary

The solution does a great job of explaining the concepts being asked in the question. The solution is very well explained and detailed. A good response for anyone looking to get a deeper understanding of the accounting concepts. Overall, an excellent response.

$2.19