ACCT 3331 Chapter 4 Take Home Quiz (You may use notes, your text book and even

work in teams, but do not ask other teachers or learning lab)

Wilcox Corporation had income from continuing operations of $800,000 (after taxes) in 2010. In addition, the following information, which has not been considered, is as follows. 1. In 2010, Wilcox experienced an uninsured earthquake loss in the amount of $200,000. 2. A machine was sold for $140,000 cash during the year at a time when its book value was $110,000. (Depreciation has been properly recorded.) The company often sells machinery of this type. 3. Wilcox decided to discontinue its stereo division in 2010. During the current year, the loss on the disposal of this component of the business was $150,000 less applicable taxes. Instructions Present in good form the income statement of Wilcox Corporation for 2010 starting with "income from continuing operations." Assume that Wilcox's tax rate is 30% and 200,000 shares of common stock were outstanding during the year.

ACCT 3331 Chapter 4 Class Discussion Questions Porter Corporation's capital structure consists of 50,000 shares of common stock. At December 31, 2010 an analysis of the accounts and discussions with company officials revealed the following information: Sales Purchase discounts Purchases Earthquake loss (net of tax) (extraordinary item) Selling expenses Cash Accounts receivable Common stock Accumulated depreciation Dividend revenue Inventory, January 1, 2010 Inventory, December 31, 2010 Unearned service revenue Accrued interest payable Land Patents Retained earnings, January 1, 2010 Interest expense General and administrative expenses Dividends declared Allowance for doubtful accounts Notes payable (maturity 7/1/13) Machinery and equipment Materials and supplies Accounts payable $1,100,000 18,000 642,000 42,000 128,000 60,000 90,000 200,000 180,000 8,000 152,000 125,000 4,400 1,000 370,000 100,000 290,000 17,000 150,000 29,000 5,000 200,000 450,000 40,000 60,000

The amount of income taxes applicable to ordinary income was $48,600, excluding the tax effect of the earthquake loss which amounted to $18,000. Instructions (a) Prepare a multiple-step income statement. (b) Prepare a retained earnings statement.