E5-1B (Similar to E5-6) [LO 3] Preparing and Interpreting a Classified Balance Sheet with

Discussion of Terminology (Challenging)

Kingston, Inc., manufactures, markets, and distributes fishing gear. Presented here are the items listed on
its recent balance sheet (dollars in millions) in alphabetical order:

Accounts payable $35,939 Other assets (noncurrent) $14,949

Accounts receivable, net 84,406 Other current assets 12,778

Accrued compensation 26,312 Other intangible assets, net 33,966

Additional paid-in capital 49,138 Other long-term liabilities 58,070

Cash and cash equivalents 807 Other payables and accrued liabilities 32,318

Common stock, 28,947,222 shares 46,268 Prepaid expenses 12,933

outstanding
Goodwill 90,110 Property, plant, and equipment, net 236,085

Inventories 43,112 Retained earnings 170,101

Long-term debt 101,000 Short-term debt 10,000

Required:
1. Prepare a classified consolidated balance sheet for Kingston, Inc., for the current year (ended
December 31) using the categories presented in the chapter.

ANSWER:

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 Kingston, Inc. Corporation

Balance Sheet at 31/12

Dollars in millions

CURRENT ASSETS: CURRENT LIABLITIES:

Cash & Cash Equivalent $ 807 A/P $ 35,939
Short term investment N/P
A/R $ 84,406 Short Term Debt $ 10,000
Supplies CPLTD
Inventory $ 43,112 Unearned Revenues
Prepaid Expenses $ 12,933 Expenses Payable
Others $ 12,778 Others $ 32,318
TOTAL CURRENT ASSETS $ 154,036 TOTAL CURRENT LIABLITIES $ 78,257

NONCURRENT ASSETS: NONCURRENT LIABLITIES:

Long Term Investment Long Term N/P $ 101,000
PPE $ 236,085 Bank Loan
Net Intangible $ 33,966 Bounds
Good Will $ 90,110 Accrued compensation $ 26,312
Others $ 14,949 Others $ 58,070
TOTAL NONCURRENT ASSETS $ 375,110 TOTAL NONCURRENT LIABLITIES $ 185,382

TOTAL LIABLITIES $ 263,639

OWNER'S EQUITY:
Contributed Capital $ 46,268
Additional Paid in Capital $ 49,138
Retain Earning $ 170,101

TOTAL OE $ 265,507

TOTAL ASSTS $ 529,146 TOTAL LIABLITIES AND OE $ 529,146

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E5-4B (Similar to E5-12) [LO 3] Preparing a Multiple-Step Income Statement
The following data were taken from the records of Kramer Corporation at December 31, 2012:

Sales revenue $78,000

Gross profit 24,500

Selling (distribution) expense 6,000

Administrative expense ?

Pretax income 13,500

Income tax rate 35%

Shares of stock outstanding 3,250

Required:
Prepare a complete multiple-step income statement for the company (showing both gross profit and
income from operations). Show all computations. ( Hint: Set up the side captions or rows starting with
sales revenue and ending with earnings per share; rely on the amounts and percentages given to infer
missing values.)

ANSWER:

Kramer Corporation
Income Statement
For the period ended 31/12/2012
Sales Revenues $ 78,000
COGS $ 53,500
GROSS PROFIT $ 24,500

OPERATING EXPENSES
Selling (distribution) expense $ (6,000)
Administrative expense $ (5,000)
TOTAL OPERATING EXPENSES $(11,000)

OPERATING PROFIT $ 13,500

OTHER REVENUES & GAINS $ -

PRETAX INCOME $ 13,500

Tax 35% $ 4,725

NET INCOME $ 8,775

EPS 2.7 L.E per share

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E5-5B (Similar to E5-13) [LO 3] Preparing a Multiple-Step Income Statement
The following data were taken from the records of Colins Industries at December 31, 2011:

Sales revenue $138,000

Administrative expense 12,000

Selling (distribution) expense 13,000

Income tax rate 30%

Gross profit 63,000

Shares of stock outstanding 2,800

Required:
Prepare a complete multiple-step income statement for the company (showing both gross profit and
income from operations). Show all computations

ANSWER:

Colins Industries
Income Statement
During the period ended 31/12/2011
Sales Revenues $ 138,000
COGS $ (75,000)
GROSS PROFIT $ 63,000

OPERATING EXPENSES
Selling (distribution) expense $ (13,000)
Administrative expense $ (12,000)
TOTAL OPERATING EXPENSES $ (25,000)

OPERATING PROFIT $ 38,000

OTHER REVENUES & GAINS $ -

PRETAX INCOME $ 38,000

Tax 30% $ 11,400

NET INCOME $ 26,600

EPS 9.5L.E per share

Thank you!
Magdy Saber Elsayed Ibrahim

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