Chapter 15
Preparing an Income
Statement
Mr. Hunter
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2
INCOME STATEMENT INFORMATION
ON A WORK SHEET
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page 448
3
REVENUE SECTION OF AN INCOME STATEMENT
page 449
FOR A MERCHANDISING BUSINESS
1.
2.
3.
4.
5.
Heading
Revenue section
Title of revenue account
Sales amount
Less contra accounts
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6.
7.
8.
9.
Contra account amounts
Contra account total
Net Sales
Net sales amount
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
3. Purchases
section
4. Total cost of
merchandise
available for sale
5. Ending inventory
6. Cost of
merchandise sold
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5
COMPLETING AN INCOME STATEMENT
FOR A MERCHANDISING BUSINESS
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
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LESSON 15-2
Analyzing an Income
Statement
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7
ANALYZING AN INCOME STATEMENT
SHOWING A NET LOSS
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page 457
8
FINANCIAL RATIOS
page 459
Earnings per Share
Net Income
after Federal
Income Tax
$80,313.95
÷
Number of
Shares
Outstanding
=
Earnings
per Share
÷
2,500
=
$32.13
Price-Earnings Ratio
Market Price
per Share
$345.00
÷
÷
Earnings per
Share
$32.13
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=
=
Price-Earnings
Ratio
10.7
LESSON 15-3
Preparing a Statement of
Stockholder’s Equity
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10
CAPITAL STOCK SECTION OF THE STATEMENT
OF STOCKHOLDERS’ EQUITY
1.
2.
3.
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 © Thomson/South-Western
page 461
11
RETAINED EARNINGS SECTION OF THE
STATEMENT OF STOCKHOLDERS’ EQUITY
1. Retained Earnings
2. Beginning balance
3. Net income after federal
income tax
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4.
5.
6.
7.
page 462
Dividends declared
Increase in retained earnings
Ending balance
Total stockholders’ equity
LESSON 15-4
Preparing a Balance Sheet
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13
BALANCE SHEET INFORMATION ON A
WORK SHEET
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page 464
14
CURRENT ASSETS SECTION OF A
BALANCE SHEET
1. Heading
2. Begin assets section
3. Book value of
accounts receivable
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page 465
4. Asset accounts
5. Current assets
15
PLANT ASSETS SECTION OF A
BALANCE SHEET
1.
2.
3.
4.
5.
page 466
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.
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16
LIABILITIES SECTION OF A BALANCE
SHEET
page 467
1. Heading
2. Account title and
amount of each
current liability
3. Total liabilities
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17
STOCKHOLDERS’ EQUITY SECTION OF A
page 468
BALANCE SHEET
1.
2.
3.
4.
Stockholders’ Equity
Capital stock
Retained earnings
Total stockholders’ equity
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5. Total liabilities and
stockholders’ equity
6. Double rules
18
COMPLETED BALANCE SHEET
page 469
(continued on next slide)
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19
COMPLETED BALANCE SHEET
(continued from previous slide)
CENTURY 21 ACCOUNTING © Thomson/South-Western
page 469
20
Chapter Schedule
April 6
•Lecture, Application 15-1
April 8
•Application 15-2, 15-3
April 10
•Application 15-4, 15-5 (counts as your test) (due at 1:50 on
April 10)
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