LESSON 15-1
Preparing an Income
Statement
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
INCOME STATEMENT INFORMATION
ON A WORK SHEET
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 448
LESSON 15-1
3
REVENUE SECTION OF AN INCOME STATEMENT
page 449
FOR A MERCHANDISING BUSINESS
1
2
3
4
5
8
1.
2.
3.
4.
5.
Heading
Revenue section
Title of revenue account
Sales amount
Less contra accounts
6
6.
7.
8.
9.
7
9
Contra account amounts
Contra account total
Net Sales
Net sales amount
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-1
4
COST OF MERCHANDISE SOLD SECTION OF AN
INCOME STATEMENT FOR A MERCHANDISING
page 450
BUSINESS
1. Cost of
Merchandise Sold
section
2. Beginning
inventory
1
3. Purchases
section
2
4. Total cost of
merchandise
available for sale
3
5. Ending inventory
5
6
4
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6. Cost of
merchandise sold
LESSON 15-1
5
COMPLETING AN INCOME STATEMENT
FOR A MERCHANDISING BUSINESS
7
1
2
3
4
5
6
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 452
1. Gross Profit on
Sales
2. Expenses section
3. Net Income before
Federal Income Tax
4. Less Federal
Income Tax Expense
5. Net Income after
Federal Income Tax
6. Double lines
7. Component
percentage
LESSON 15-1
6
TERMS REVIEW
page 454
 net sales
 cost of merchandise sold
 gross profit on sales
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-1
LESSON 15-2
Analyzing an Income
Statement
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
8
ANALYZING AN INCOME STATEMENT
SHOWING A NET LOSS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 457
LESSON 15-2
9
FINANCIAL RATIOS
page 459
Earnings per Share
Net Income
after Federal
Income Tax
$80,313.95
Number of
÷
Shares
=
Outstanding
÷
2,500
Earnings
per Share
=
$32.13
=
Price-Earnings
Ratio
=
10.7
Price-Earnings Ratio
Market Price
per Share
÷
Earnings
per
Share
$345.00
÷
$32.13
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-2
10
TERMS REVIEW
page 460
 financial ratio
 earnings per share
 price-earning ratio
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-2
LESSON 15-3
Preparing a Statement of
Stockholders’ Equity
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
12
CAPITAL STOCK SECTION OF THE
STATEMENT OF STOCKHOLDERS’ EQUITY
page 461
1
2
3
1.
2.
3.
4.
5.
4
5
Heading
Capital Stock and Par Value
Stock at the beginning of the year
Stock issued during the year
Total stock issued at the end of the year
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-3
13
RETAINED EARNINGS SECTION OF THE
STATEMENT OF STOCKHOLDERS’ EQUITY
1
3
2
page 462
5
4
6
1. Retained Earnings
2. Beginning balance
3. Net income after federal
income tax
4.
5.
6.
7.
7
Dividends declared
Increase in retained earnings
Ending balance
Total stockholders’ equity
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-3
14
TERMS REVIEW
page 463
 statement of stockholders’ equity
 par value
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-3
LESSON 15-4
Preparing a Balance Sheet
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
16
BALANCE SHEET INFORMATION
ON A WORK SHEET
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 464
LESSON 15-4
17
CURRENT ASSETS SECTION
OF A BALANCE SHEET
page 465
1
2
3
4
5
1. Heading
2. Begin assets section
3. Book value of accounts receivable
4. Remaining current asset accounts
5. Current assets
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4
18
PLANT ASSETS SECTION
OF A BALANCE SHEET
page 466
1
2
4
3
1.
2.
3.
4.
5.
5
Write the heading Plant Assets.
Calculate the book value of office equipment.
Use the same procedure to calculate the book value of store equipment.
Calculate total plant assets.
Calculate total assets.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4
19
LIABILITIES SECTION
OF A BALANCE SHEET
page 467
1. Heading
2. Account title and
amount of each
current liability
3. Total liabilities
1
2
3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4
20
STOCKHOLDERS’ EQUITY SECTION
OF A BALANCE SHEET
1
3
page 468
2
4
5
1.
2.
3.
4.
Stockholders’ Equity
Capital stock
Retained earnings
Total stockholders’ equity
5. Total liabilities and
stockholders’ equity
6. Double rules
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
6
LESSON 15-4
21
COMPLETED BALANCE SHEET
page 469
(continued on next slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4
22
COMPLETED BALANCE SHEET
page 469
(continued from previous slide)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4
23
TERMS REVIEW
page 471
 current liabilities
 long-term liabilities
 supporting schedule
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 15-4