Exercise 11-16A, Obj. 1, 3
Student Name
Course Name
Student ID:
Date:
Other revenues ………………………………….………………………………. 1,600$
Income tax expense ……………………………………………………………. 5,640
Sales revenue ………………..………………………………….……………….. 122,000
Total operating expenses…………………….………………………………. 104,800
Financial Accounting
Prepare an income statement; compute earnings per share;
evaluate a company as an investment
The Hooper Book Company accounting records include the following for 2016 (in thousands):
Students: Please fill-in areas that are
shaded.
Exercise 11-16A
Instructions
1. Prepare Hooper Book’s single-step income statement for the year ended December 31, 2016,
including EPS. Moran had 1,000,000 shares of common stock and no preferred stock
outstanding during the year.
2. Assume Hooper Book Company’s income from operations refelcts that its core business has been
steadily increasing by 10% per year over the past three years and that none of its operations have
been discontinued. What does this say about the quality of its earnings?
3. Assume investors capitalize Hooper Book’s earnings from continuing operations at 7%.
Estimate the price of one share of the company’s stock.
Requirement 1
Thousands
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000$
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . FORMULA
Earnings per share (EPS):
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FORMULA
Requirement 2:
Requirement 3
Estimated value of one share of Hooper Book stock :
Stock Price =
Year Ended December 31, 2016
Test Your Knowledge
Hooper Book Company
Income Statement
Investment capitalization rate =
EPS from continuing operations =
The company’s quality of earnings would be considered to be very good,
based on its steady growth each year and no discontinued operations
during recent years
Exercise 11-16A, Obj. 1, 3
Student Name
Course Name
Student ID:
Date:
Other revenues ………………………………………………………………….. 1,600$
Income tax expense ……………………………………………………………. 5,640
Sales revenue …………………………………………………………………….. 122,000
Total operating expenses…………………………………………………….. 104,800
Financial Accounting
Prepare an income statement; compute earnings per share;
evaluate a company as an investment
The Hooper Book Company accounting records include the following for 2016 (in thousands):
Students: Please fill-in areas that are
shaded.
bu 121 id 503
Exercise 11-16A
Instructions
1. Prepare Hooper Book’s single-step income statement for the year ended December 31, 2016,
including EPS. Moran had 1,000,000 shares of common stock and no preferred stock
outstanding during the year.
2. Assume Hooper Book Company’s income from operations refelcts that its core business has been
steadily increasing by 10% per year over the past three years and that none of its operations have
been discontinued. What does this say about the quality of its earnings?
3.
Assume investors capitalize Hooper Book’s earnings from continuing operations at 7%.
Estimate the price of one share of the company’s stock.
Requirement 1
Thousands
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000$
1,600
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,600
Hooper Book Company
Income Statement
Year Ended December 31, 2016
Test Your Knowledge
Other Revenues
bu 121 id 503
5,640
Earnings per share (EPS):
Estimated value of one share of Hooper Book stock :
Total Operating Expense
Income Tax Expense
Exercise 11-22A, Obj. 5
Student Name
Course Name
Student ID:
Date:
Exercise 11-22A
Instructions:
Prepare the company’s statement of retained earnings for the year ended December 31, 2016.
How does the prior-period adjustment affect EcoClean’s net income for 2016?
Requirement
(Millions)
Retained earings balance, December 31, 2015, as orignally reported………………. 344$
Prior-period adjustment (debit)………………………………………………………………………..
Dividends for 2016………………………………………………………………………………………………. (68)
Retained earnings balance, December 31, 2016……………………………………………….. FORMULA
Test Your Knowledge
EcoClean, Inc.
Statement of Retained Earnings
Year Ended December 31, 2016
Enter explanation here.
Report a prior-period adjustment on the statement of
retained earnings
EcoClean, Inc., a household products chain, reported a prior-period adjustment in 2016.
An accounting error caused net income of 2015 to be understated by $13 million. Retained
earnings at December 31, 2015, as previously reported, was $344 million. Net income for 2016
was $97 million, and 2016 dividends were $68 million.
Financial Accounting
Students: Please fill-in areas that are
shaded light-yellow.
Exercise 11-22A, Obj. 5
Student Name
Course Name
Student ID:
Date:
Exercise 11-22A
Instructions:
Prepare the company’s statement of retained earnings for the year ended December 31, 2016.
How does the prior-period adjustment affect EcoClean’s net income for 2016?
Requirement
(Millions)
Retained earings balance, December 31, 2015, as orignally reported………………. 344$
Prior-period adjustment (debit)……………………………………………………………………….. 13
Retained earnings balance, December 31, 2015, as adjusted 357
EcoClean, Inc., a household products chain, reported a prior-period adjustment in 2016.
An accounting error caused net income of 2015 to be understated by $13 million. Retained
earnings at December 31, 2015, as previously reported, was $344 million. Net income for 2016
was $97 million, and 2016 dividends were $68 million.
Test Your Knowledge
Year Ended December 31, 2016
Statement of Retained Earnings
EcoClean, Inc.
Financial Accounting
Report a prior-period adjustment on the statement of
retained earnings
Students: Please fill-in areas that are
shaded light-yellow.
BU 122 ID 5003
Retained earnings balance, December 31, 2016……………………………………………….. 386$
Problem 11-53A, Obj 3, 4, 5
Student Name
Course Name
Student ID:
Date:
Revenues and gains:
Sales …..…..…..…..…..…..…..…..………..…..…..…..…..…..…..… 870,000$
Paid-in capital in excess of par—common ………..…..…..…... 14,000
Total revenues and gains….…..…..………..…..…..…..…..…..… 884,000
Expenses and losses:
Cost of goods sold…..…..………..…..…..…..…..…..…..………... 385,000$
Selling expenses..…..………..…..…..…..…..…..…..………..…..… 104,000
General expenses……..…..………..…..…..…..…..…..…..…..…… 96,000
Unrealized loss on available-for-sale investments..…..…..….. 10,000
Dividends paid ….…..…..…..…..………..…..…..…..…..…..….... 12,000
Income tax expense …..…..………..…..…..…..…..…..…..………. 85,500
Total expenses and losses ……..………..…..…..…..…..…..… 692,500
Income from operations ….…..…..………..…..…..…..…..…..…..…..… 191,500
Other gains and losses:
Loss on discontinued operations …….…..…..…..…..………..… (25,000)
Net income……..…..…..…..…..…..…..………..…..…..…..…..…..…..…. 166,500
Earnings per share …..…..…..…..…..…..…..………..…..…..…..…..….. 11.10$
The individual amounts listed on the income statement are correct. However, some accounts are
reported incorrectly, and some accounts do not belong on the income statement at all. Also, income
tax (30%) has not been applied to Discontinued Operations. Natural Foods issued 15,000 shares of
common stock back in 2004 and held 5,000 shares as treasury stock all during the fiscal year 2016.
Financial Accounting
Natural Foods, Inc.
Income Statement
Prepare an income statement; compute earnings per share;
prepare a statement of comprehensive income
Megan Hodge, accountant for Natural Foods, Inc., was injured in a skiing accident. Whilse he was recuperating,
another inexperienced employee prepared the following income statement for the fi scal year ended June 30, 2016:
June 30, 2016
Students: Please fill-in areas that are shaded.
Problem 11-53A
Instructions:
1 Prepare a corrected Statement of Comprehensive Income for Natural Foods for the
fiscal year ended June 30, 2016. Use the single step format, which lists all revenues together and
all expenses together, as well as other comprehensive income, net of tax. After calculating
comprehensive income, prepare the earnings-per-share section of the statement.
2Prepare a Statement of Comprehensive Income ofr Natural Foods Inc., for the fiscal year ended
June 30, 2016. Start with Net income, as computed in Requirement 1
Revenues:
Expenses:
Total expenses……………………………………………………………………….. –
Income from continuing operations…………………………………………………
less income tax savings of $7,500…………………………………………………….. FORMULA
Earnings per share:
Income from continuing operations……………………………………………
Net Income:
Other Comprehensive Income:
Year Ended June 30, 2016
Test Your Knowledge
Net income……………………………………………………………………………………..
Natural Foods, Inc.
Income Statement
Comprehensive income……………………………………………………………………………………..
Natural Foods, Inc.
Statement of Comprehensive Income
Year Ended June 30, 2016
Problem 11-53A, Obj 3, 4, 5
Student Name
Course Name
Student ID:
Date:
Revenues and gains:
Sales …..…..…..…..…..…..…..…..………..…..…..…..…..…..…..… 870,000$
Paid-in capital in excess of par—common ………..…..…..…... 14,000
Total revenues and gains….…..…..………..…..…..…..…..…..… 884,000
Expenses and losses:
Cost of goods sold…..…..………..…..…..…..…..…..…..………... 385,000$
Selling expenses..…..………..…..…..…..…..…..…..………..…..… 104,000
General expenses……..…..………..…..…..…..…..…..…..…..…… 96,000
Unrealized loss on available-for-sale investments..…..…..….. 10,000
Dividends paid ….…..…..…..…..………..…..…..…..…..…..….... 12,000
Income tax expense …..…..………..…..…..…..…..…..…..………. 85,500
Total expenses and losses ……..………..…..…..…..…..…..… 692,500
Income from operations ….…..…..………..…..…..…..…..…..…..…..… 191,500
Other gains and losses:
Loss on discontinued operations …….…..…..…..…..………..… (25,000)
Net income……..…..…..…..…..…..…..………..…..…..…..…..…..…..…. 166,500
Earnings per share …..…..…..…..…..…..…..………..…..…..…..…..….. 11.10$
The individual amounts listed on the income statement are correct. However, some accounts are
reported incorrectly, and some accounts do not belong on the income statement at all. Also, income
tax (30%) has not been applied to Discontinued Operations. Natural Foods issued 15,000 shares of
common stock back in 2004 and held 5,000 shares as treasury stock all during the fiscal year 2016.
Problem 11-53A
Instructions:
1 Prepare a corrected Statement of Comprehensive Income for Natural Foods for the
Financial Accounting
Natural Foods, Inc.
Income Statement
June 30, 2016
Prepare an income statement; compute earnings per share;
prepare a statement of comprehensive income
Megan Hodge, accountant for Natural Foods, Inc., was injured in a skiing accident. Whilse he was recuperating,
another inexperienced employee prepared the following income statement for the fi scal year ended June 30, 2016:
Test Your Knowledge
Students: Please fill-in areas that are shaded.
fiscal year ended June 30, 2016. Use the single step format, which lists all revenues together and
all expenses together, as well as other comprehensive income, net of tax. After calculating
comprehensive income, prepare the earnings-per-share section of the statement.
2Prepare a Statement of Comprehensive Income ofr Natural Foods Inc., for the fiscal year ended
June 30, 2016. Start with Net income, as computed in Requirement 1
Revenues:
870,000$
Expenses:
385,000$
104,000
Year Ended June 30, 2016
Cost of Goods Sold
Selling Expenses
Natural Foods, Inc.
Income Statement
Sales Revenues
Natural Foods, Inc.
Year Ended June 30, 2016
General Expenses
Income Tax Expense