The following data were selected from the records of Magnus Incorporated for the month ended February 28

M10 ♦ CORPORATE INCOME STATEMENT

The following data were selected from the records of Magnus Incorporated for the month ended February 28:
Advertising expense    $10,100    Insurance expense    $500
Depreciation expense—office equipment    500    Interest expense    2,500
Depreciation expense—store equipment    2,500    Loss from disposal of a segment of business    23,000
Merchandise inventory, February 1    75,000
Extraordinary loss    10,000    Merchandise inventory, February 28    68,000
Income tax:        Office salaries expense    17,000
On continuing operations    15,000    Office    1,025
supplies expense
Reduction applicable to loss from disposal of a segment of the business    4,500    Purchases    300,000
Rent expense    500
Sales    452,500
Reduction applicable to extra ordinary loss    1,100    Sales salaries expense    15,000
Store supplies expense    2,525
This firm’s accounting system generates these totals on a monthly basis. You have been asked to develop a worksheet (file name IS) that will allow a monthly income statement to be prepared by entering monthly figures in the appropriate cells. The income statement should include a section for earnings per share. There were 20,000 shares of common stock (no preferred) outstanding throughout the month. Use the provided data as input for your worksheet.
Review the Model-Building Problem Checklist on page 154 to ensure that your worksheet is complete. Print the worksheet when done. Check figure: February net income, $50,950.
To test your model, use the following data for the month ended March 31:
193194
Advertising expense    $11,500    Insurance expense    $500
Interest expense    6,000
Depreciation expense-office equipment    810    Loss from disposal of a segment of business (additional expenses from February disposal)    1,000
Depreciation expense-store equipment    3,325    Merchandise inventory, March 1    68,000
Extraordinary loss (additional expenses from February loss)    7,500    Merchandise inventory, March 31    70,000
Income tax:        Office salaries expense    20,000
On continuing operations    10,000    Office supplies expense    935
Reduction applicable to loss from disposal of a segment of the business    400    Purchases    251,200
Reduction applicable to extraordinary loss    1,600    Rent expense    1,000
Sales    350,000
Sales salaries expense    26,250
Store supplies expense    3,150
There was no change in the number of shares of common stock outstanding. Print the worksheet when done. Check figure: March net income, $10,920.

Here’s the SOLUTION

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