Chapter 11
The Income Statement and the Statement
of Stockholders’ Equity
Short Exercises
(5-10 min.) S 11-1
There are several ways that companies improperly recognize revenue
which results in financial statement fraud.
a. “Channel stuffing” where a company may ship inventory to regular
customers in amounts in excess of the amounts ordered by the
customer. This usually occurs near the end of the reporting period so
that the excess merchandise cannot be returned to the seller prior to the
preparation of the financial statements.
b. Reporting revenue when a significant portion of the services are still
to be performed or goods are still to be delivered.
c. Providing incentives for customers to purchase more inventory than
is needed in return for future discounts or other benefits.
d. Reporting sales to fictitious or nonexistent customers, this may also
include the falsification of shipping and inventory records.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-1
(10 min.) S 11-2
Req. 1
Gross profit = $703,935 thousand ($1,825,425 − $1,121,490)
Income from continuing operations = $63,026 thousand
Net income = $60,626 thousand
Req. 2
Income from continuing operations = $63,026 thousand
Continuing operations will continue from period to period. Their
continuity makes income from continuing operations a good predictor of
future net income.
11-2
Financial Accounting 9/e Solutions Manual
(10-15 min.) S 11-3
Amazing Way, Inc.
Income Statement
Year Ended December 31, 2012
(Thousands)
Net sales revenue ................................................................
$181,000
Cost of goods sold ..............................................................
73,000
Gross profit ..........................................................................
108,000
Operating expenses .................………………………………
55,000
Operating income ................................................................
53,000
Other gains (losses)............................................................
(19,000)
Income from continuing operations before income tax..
34,000
Income tax expense (35%) .................................................
11,900
Income from continuing operations..................................
22,100
Loss on discontinued operations, $13,000,
less income tax savings of $4,550 ................................
Income before extraordinary item .....................................
(8,450)
13,650
Extraordinary gain, $3,000,
less income tax of $1,050 ..............................................
1,950
Net income ...........................................................................
$ 15,600
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-3
(10-15 min.) S 11-4
Estimated value
of one share
of Mango stock
=
Earnings per share
Investment
capitalization rate
=
$2.20
.05
=
$44.00
Mango’s stock is quoted at $94.02. At that price, an investor should sell
because the investor believes the stock is worth only $44.00.
Student responses will vary depending on the market price accessed by
the student.
(10 min. ) S 11-5
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
DEBIT
Sept. 12 Accounts Receivable (200,000 x $.34) ......
Sales Revenue .......................................
68,000
Oct. 18 Cash (100,000 x $.30) .................................
Foreign-Currency Transaction Loss .........
Accounts Receivable ($68,000 x ½)
30,000
4,000
Nov. 15 Cash (100,000 x $.36) .................................
Accounts Receivable.............................
Foreign-Currency Transaction Gain ....
36,000
11-4
Financial Accounting 9/e Solutions Manual
CREDIT
68,000
34,000
34,000
2,000
(10-15 min.) S 11-6
Req. 1
Journal
DATE
Apr.
ACCOUNT TITLES AND EXPLANATION
24 Cash (900,000 pesos × $0.099) .......... ......
Accounts Receivable
(900,000 pesos × $0.094) ............. ..
Foreign-Currency Transaction Gain..
Collection on account.
DEBIT
CREDIT
89,100
84,600
4,500
Req. 2
Oct.
25 Accounts Payable
(21,000 Swiss francs × $1.12)…................
Foreign-Currency Transaction Loss…….
Cash (21,000 Swiss francs × $1.14)...
Payment on account.
23,520
420
23,940
Req. 3
Both the Mexican peso and the Swiss franc strengthened against the
U.S. dollar.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-5
(15 min.) E 11-7
Req. 1
The discontinued operations were more like a revenue. This is clear from
the fact that their amount is added in determining net income.
Req. 2
The discontinued operations should be included in net income because
they represent revenues, which are a basic component of net income.
Req. 3
Use Income from continuing operations ($12,400 million) to predict
future income because that amount of income is most likely to repeat in
future years.
11-6
Financial Accounting 9/e Solutions Manual
(5-10 min.) S 11-8
Journal
ACCOUNT TITLES AND EXPLANATION
DATE
DEBIT
Income Tax Expense ($117,000 × .30)……….
Income Tax Payable ($91,000 × .30)..........
Deferred Income Tax Liability……………..
Recorded income tax for the year.
1.
CREDIT
35,100
27,300
7,800
2. INCOME STATEMENT
Income before income tax…………………
Income tax expense………………………...
Net income…………………………………...
$117,000
(35,100)
$ 81,900
BALANCE SHEET
Current liabilities:
Income tax payable……………………..
$ 27,300
Long-term liabilities:
Deferred income tax liability………….
7,800
(10-15 min.) S 11-9
Earnings per share of common stock
(10,000 shares of common stock outstanding):
Income from continuing operations
[($22,100 − $6,000) / 10,000]…………………………
$1.61
Loss on discontinued operations, net of tax
($8,450 / 10,000)……………………………………
(0.85)
Income before extraordinary item
[($13,650 − $6,000) / 10,000]…………………………
.76
Extraordinary gain, net of tax ($1,950 / 10,000)……..
.20
Net income [($15,600 − $6,000) / 10,000]……………..
$0.96
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-7
(5-10 min.) S 11-10
Req. 1
Amazing Way, Inc.
Income Statement (partial)
Year Ended December 31, 2012
Net income…………….…………………….........
$15,600
Other comprehensive income:
Unrealized gain on investments…………….
$1,100
Foreign-currency translation adjustment….
2,400
Comprehensive income………………………….
3,500
$19,100
Req. 2
Earnings per share is not reported for other comprehensive income; it is
reported only for net income and its components.
11-8
Financial Accounting 9/e Solutions Manual
(10 min.) S 11-11
Req. 1
Earnings
per share
=
Net income − preferred dividends
Average number of common shares outstanding
Req. 2
Earnings per share of common stock:
Income (loss) from continuing operations…………….....
$X.XX
Income (loss) from discontinued operations…………….
.XX
Income (loss) before extraordinary item……………........
X.XX
Extraordinary gain or loss…………………………………..
.XX
Net income (net loss)…………………………………………
$X.XX
Req. 3
Earnings per share is useful because it relates a company’s income to
one share of the company’s stock. Since stock prices are quoted at an
amount per share, earnings per share is useful to help determine the
value of one share of stock.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-9
(10 min.) S 11-12
iLife Inc.
Statement of Retained Earnings
Year Ended December 31, 2012
Retained earnings balance, December 31, 2011,
as originally reported………………………………………..
$70,000
Prior period adjustment — debit to correct error
in 2011……………………………………………………........
(18,000)
Retained earnings balance, December 31, 2011,
as adjusted………………………………………………........
52,000
Net income for 2012……………………………………….........
85,000
137,000
Dividends for 2012………………………………………………
Retained earnings balance, December 31, 2012……………
11-10
Financial Accounting 9/e Solutions Manual
(29,000)
$108,000
(10 min.) S 11-13
Req. 1
$1,380,000
($200,000 + $1,180,000)
Req. 2
The stock dividend:
 decreased retained earnings by $72,000
 increased total paid-in capital by $72,000 ($30,000 + $42,000)
 had no effect on total stockholders’ equity
 had no effect on total assets
Req. 3
Cost of treasury stock purchased = $8,000
Cost of treasury stock sold = $3,000
Proceeds from sale of treasury stock = $13,000 ($3,000 + $10,000)
Req. 4
$70,000 ($185,000 + X – $20,000 – $72,000 = $163,000)
Req. 5
Comprehensive income is $89,000 ($70,000 + $9,000 + $10,000)
Addition to Accumulated Other Comprehensive Income is $19,000
($89,000 – $70,000)
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-11
(10-15 min.) S 11-14
Req. 1
Management of Westminster Computer Inc. is responsible for the
company’s financial statements.
Req. 2
The accounting standard for financial statements is accounting
principles generally accepted in the United States of America (GAAP).
Req. 3
Management has established and maintains internal accounting control
over financial reporting to fulfill its responsibility for reliable financial
information.
Req. 4
SLMA, LLP, auditors located in Aurora, Colorado, gave an outside
opinion on Westminster’s financial statements. SLMA, LLP released its
opinion on December 28, 2012.
Req. 5
The audit covered Westminster’s consolidated balance sheets at
September 30, 2012, and September 30, 2011, and consolidated income
statements (statements of operations), statements of shareholders’
equity and cash flows for the three years ended September 30, 2012.
11-12
Financial Accounting 9/e Solutions Manual
(continued) S 11-14
Req. 6
The standard for conducting an audit is the standards of the Public
Company Accounting Oversight Board (United States).
Req. 7
The auditor believed that Westminster’s financial statements present
fairly, in all material respects, the financial position, results of
operations, and cash flows for the three-year period.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-13
Exercises
(15-20 min.) E 11-15A
Req.1
Dupree Cycles, Inc.
Income Statement
Year Ended September 30, 2012
Thousands
Net sales .. ……………………………………………………...
$13,000
Total operating expenses ................................................
12,200
Income from continuing operations before
income tax ................................................................
800
Income tax expense .........................................................
285
Income from continuing operations ...............................
515
Income from discontinued operations,
$320, less income tax, $64 .......................................
256
Income before extraordinary item ...................................
771
Extraordinary loss, $12, less income tax saving, $2 .....
(10)
$ 761
Net income ........................................................................
Req.2
Dupree Cycles, Inc.
Statement of Comprehensive Income
Year Ended September 30, 2012
Thousands
Net income……………………………………………………..
$ 761
Other comprehensive income (loss):
Unrealized gain on available-for-sale investments.....
$39
Foreign-currency translation gain ...............................
310 ......................................
Total other comprehensive income ................................
Comprehensive income
11-14
Financial Accounting 9/e Solutions Manual
349
$1,110
(20-25 min.) E 11-16A
Req. 1
Moran Book Company
Income Statement
Year Ended December 31, 2012
Thousands
Sales revenue ...................................................................
$106,000
Other revenues .................................................................
1,700
Total revenue ....................................................................
107,700
Total operating expenses ................................................
97,600
Income tax expense .........................................................
4,040
Income from continuing operations* ..............................
6,060
Extraordinary gain, $2,000, less
income tax, $800 .......................................................
1,200
Net income ........................................................................
$ 7,260
Earnings per share (EPS):
Income from continuing operations*
($6,060 / 1,200)……........................................
$5.05
Extraordinary gain ($1,200 / 1,200)………………..
1.00
Net income ($7,260 / 1,200)…………………………
$6.05
_____
*Can also be labeled “Income before extraordinary item.”
Req. 2
Estimated value of
one share of
Moran Book stock
Chapter 11
EPS from continuing
operations
$5.05
=
=
=
Investment
.09
capitalization rate
The Income Statement and the Statement of Stockholders’ Equity
$56.11
11-15
(10-15 min.) E 11-17A
11-16
Estimated
value of
one share of
Resource Inc. stock
EPS from
continuing operations
Investment
capitalization rate
=
$54.20
=
$4.50
i
i
=
$4.50
$54.20
Financial Accounting 9/e Solutions Manual
=
8.3%
(10-15 min.) E 11-18A
Req. 1
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
DEBIT CREDIT
9 Inventory…………………………………………….
Accounts Payable (600,000 yen × $.0087)…
5,220
July 18 Accounts Payable………………………………….
Cash (600,000 yen × $.0076)………………….
Foreign-Currency Transaction Gain………..
5,220
June
5,220
4,560
660
19 Accounts Receivable (30,000 euros × $1.17)… 35,100
Sales Revenue………………………………….
35,100
28 Cash (30,000 euros × $1.14)……………………... 34,200
Foreign-Currency Transaction Loss……………
900
Accounts Receivable………………………….
35,100
Req. 2
On June 10, Twitter wanted the dollar to strengthen in order to pay
Moshu with yen that cost fewer dollars. That was what happened, and
Twitter had a foreign-currency transaction gain.
On July 23, Twitter wanted the euro to strengthen in order to receive
euros that were worth more in dollars. The euro weakened against the
dollar, and Twitter had a foreign-currency transaction loss on the
collection.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-17
(10 min.) E 11-19A
Req. 1
Income Tax Expense ($500,000 × .40)…………..
Income Tax Payable ($440,000 × .40)……….
Deferred Tax Liability………………………….
200,000
176,000
24,000
Req. 2
Tax to pay currently……………………………………….
$176,000
Req. 3
Deferred tax liability ($32,000 + $24,000)………………
$56,000
(10 min.) E 11-20A
Net income –
preferred dividends
Common shares
outstanding
11-18
=
$6,200,000 − ($220,000 × .02)
980,000
Financial Accounting 9/e Solutions Manual
=
$6.32
(10 min.) E 11-21A
(Amounts in millions, except per-share amounts)
Earnings per share of common stock (600* shares
outstanding):
Income from continuing operations ($575 / 600)……….
$ 0.96
Discontinued operations, net of tax ($82 / 600)…………
0.14
Income before extraordinary gain, net of tax ($657 / 600)
1.10
Extraordinary gain, net of tax ($6 / 600)…………………..
.01
Net income ($663 / 600)……………………………………...
_____
$ 1.11
*900 shares issued − 300 treasury shares = 600 shares outstanding.
(10 min.) E 11-22A
Req. 1
Clean, Inc.
Statement of Retained Earnings
Year Ended December 31, 2012
(Millions)
Retained earnings balance, December 31, 2011,
as originally reported……………………………………….
$346
Prior-period adjustment ……………………………………….
15
Retained earnings balance, December 31, 2011,
as adjusted……………………………………………………
361
Net income for 2012…………………………………………….
93
454
Dividends for 2012………………………………………………
Retained earnings balance, December 31, 2012…………...
(60)
$394
Req. 2
The prior-period adjustment does not affect net income for 2012.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-19
(15-25 min.) E 11-23A
Mendonca Mall, Inc.
Statement of Stockholders’ Equity
Year Ended December 31, 2013
Balance, Dec. 31, 2012
Stock dividend
$0.50 Par
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
$175,000
$ 900,000
$620,000
15,750
677,250
1,150
33,350
(693,000*)
Total
$1,695,000
——
Issuance of common
stock
34,500
Net income
350,000
350,000
Cash dividends
(182,000)
(182,000)
Balance, Dec. 31, 2013
$191,900
$1,610,600
_____
*350,000 shares × .09 × $22 per share = $693,000.
11-20
Financial Accounting 9/e Solutions Manual
$ 95,000
$1,897,500
(20-25 min.) E 11-24A
Req. 1
(Thousands)
$3.50 Par Additional
Accum. Other
Total
Common Paid In Retained Comprehensive Shareholders’
Stock
Capital Earnings
Income
Equity
Balance, Dec. 31, 2011..
$395
$1,505
Net earnings…………….
$4,700
$8
$6,608
1,050
1,050
Other comprehensive
income…………
1
Issuance of stock………
140
70
Cash dividends…………
Balance, Dec. 31, 2012..
1
210
(80)
$535
$1,575
$5,670
(80)
$9
$7,789
Req. 2
Debt ratio
=
Total liabilities
Total assets
=
$7,400
$7,400 + $7,789
=
48.7%
Req. 3
The year was profitable, as indicated by net earnings.
Req. 4
Issue price =
Chapter 11
Amount received
=
Number of shares issued
$70 + $140
40
The Income Statement and the Statement of Stockholders’ Equity
=
$5.25 per
share
11-21
(15-20 min.) E 11-25B
Req.1
Whitney Cycles, Inc.
Income Statement
Year Ended September 30, 2012
Thousands
Net sales……………………………………………………......
$13,600
Total operating expenses……………………………………
12,700
Income from continuing operations before
……………………………………………….
900
Income tax expense…………………………………………..
290
Income from continuing operations……………………….
610
income tax
Income from discontinued operations,
$280, less income tax, $56……………………………….
224
Income before extraordinary item…………………………
834
Extraordinary loss, $13, less income tax saving, $1......
(12)
Net income………………………………………………….....
$ 822
Req.2
Whitney Cycles, Inc.
Statement of Comprehensive Income
Year Ended September 30, 2012
Thousands
Net income……………………………………………………..
$ 822
Other comprehensive income (loss):
Unrealized gain on available-for-sale investments.....
$36
Foreign-currency translation gain ...............................
350 ......................................
Total other comprehensive income ................................
Comprehensive income
11-22
Financial Accounting 9/e Solutions Manual
386
$1,108
(20-25 min.) E 11-26B
Req. 1
Bergeron Book Company
Income Statement
Year Ended December 31, 2012
Thousands
Sales revenue…………………………………………..
$108,000
Other revenues………………………………………....
1,500
Total revenue……………………………………………
109,500
Total operating expenses…………………………….
97,200
Income tax expense…………………………………...
4,920
Income from continuing operations*……………....
7,380
Extraordinary gain, $1,600, less
income tax, $640……………………………………
Net income………………………………………………
960
$
8,340
Earnings per share (EPS):
Income from continuing operations*
($7,380 / 800)……........................................
$9.23
Extraordinary gain ($960 / 800)………………..
1.20
Net income ($8,340 / 800)……………………….
_____
$10.43
*Can also be labeled “Income before extraordinary item.”
Req. 2
Estimated value of
one share of
Bergeron Book stock
Chapter 11
EPS from continuing
operations
$9.23
=
=
= $115.38
Investment
.08
capitalization rate
The Income Statement and the Statement of Stockholders’ Equity
11-23
(10-15 min.) E 11-27B
11-24
Estimated
value of
one share of
Beta, Inc. stock
=
EPS for
continuing operations
Investment
capitalization rate
$54.30
=
$4.80
i
i
=
$4.80
$54.30
Financial Accounting 9/e Solutions Manual
=
8.8%
(10-15 min.) E 11-28B
Req. 1
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
DEBIT CREDIT
9 Inventory…………………………………………….
Accounts Payable (400,000 yen × $.0083)…
3,320
June 18 Accounts Payable………………………………….
Cash (400,000 yen × $.0078)………………….
Foreign-Currency Transaction Gain………..
3,320
May
3,320
3,120
200
22 Accounts Receivable (10,000 euros × $1.17)… 11,700
Sales Revenue………………………………….
11,700
28 Cash (10,000 euros × $1.11)……………………... 11,100
Foreign-Currency Transaction Loss……………
600
Accounts Receivable………………………….
11,7000
Req. 2
On May 10, Better Buy Stores wanted the dollar to strengthen in
order to pay Toyita with yen that cost fewer dollars. That was what
happened, and Better Buy had a foreign-currency transaction gain.
On June 23, Better Buy wanted the euro to strengthen in order to
receive euros that were worth more in dollars. The euro weakened
against the dollar, and Better Buy had a foreign-currency transaction
loss on the collection.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-25
(10-15 min.) E 11-29B
Req. 1
2012 Income Tax Expense ($300,000 × .25)……...
Income Tax Payable ($260,000 × .25)……..
Deferred Tax Liability ($40,000 × .25)……..
75,000
65,000
10,000
Req. 2
Tax to pay currently……………………………………….
$ 65,000
Req. 3
Deferred tax liability ($38,000 + $10,000)………………
$ 48,000
(10 min.) E 11-30B
Net income –
preferred dividends
Common shares
outstanding
11-26
=
$5,900,000 − ($880,000 × .08)
1,400,000
Financial Accounting 9/e Solutions Manual
=
$4.16
(10 min.) E 11-31B
(Amounts in millions, except per-share amounts)
Earnings per share of common stock (800* shares
outstanding):
Income from continuing operations ($583 / 800)…………..
$ 0.73
Discontinued operations, net of tax savings ($87 / 800)…
(0.11)
Income before extraordinary gain, net of tax ($496 / 800)..
0.62
Extraordinary gain, net of tax ($4 / 800)…………………….
.01
Net income ($500 / 800)………………………………………..
_____
$ 0.63
*1,000 shares issued − 200 treasury shares = 800 shares outstanding.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-27
(10 min.) E 11-32B
Dwelling, Inc.
Statement of Retained Earnings
Year Ended December 31, 2012
(Millions)
Retained earnings balance, December 31, 2011,
as originally reported…………………………………………
Prior-period adjustment …………………………………………
$345
(16)
Retained earnings balance, December 31, 2011,
as adjusted……………………………………………………..
329
Net income for 2012……………………………………………...
91
420
Dividends for 2012……………………………………………….
Retained earnings balance, December 31, 2012……………
The prior-period adjustment does not affect net income for 2012.
11-28
Financial Accounting 9/e Solutions Manual
(64)
$356
(15-25 min.) E 11-33B
Rondeau Mall, Inc.
Statement of Stockholders’ Equity
Year Ended December 31, 2013
Balance, Dec. 31, 2012
Stock dividend
$1.50 Par
Common
Stock
Additional
Paid-in
Capital
$465,000
$500,000
23,250
286,750
2,850
25,650
Retained
Earnings
$640,000
(310,000*)
Total
$1,605,000
——
Issuance of common
stock
Net income
Cash dividends
Balance, Dec. 31, 2013
$491,100
$812,400
28,500
346,000
346,000
(187,000)
(187,000)
$489,000
$1,792,500
_____
*310,000 shares × .05 × $20 per share = $310,000.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-29
(20-25 min.) E 11-34B
Req. 1
(Thousands)
$3.00 Par Additional
Accum. Other
Total
Common Paid In Retained Comprehensive Shareholders’
Stock
Capital Earnings
Income
Equity
Balance, Dec. 31, 2011..
$375
$2,225
Net earnings…………….
$4,200
$12
$6,812
990
990
Other comprehensive
income…………
3
Issuance of stock………
120
240
Cash dividends…………
Balance, Dec. 31, 2012..
3
360
(69)
$495
$2,465
$5,121
(69)
$15
$8,096
Req. 2
Debt ratio
=
Total liabilities
Total assets
=
$7,800
$7,800 + $8,096
=
49.1%
Req. 3
The year was profitable, as indicated by net earnings.
Req. 4
Issue price =
11-30
Amount received
=
Number of shares issued
Financial Accounting 9/e Solutions Manual
$120 + $240
40
=
$9.00 per
share
Quiz
Q11-35
b
Q11-36
a
Q11-37
d
($40,000 / 0.08 = $500,000)
Q11-38
c
(¥140,000 × $0.0091 = $1,274)
Q11-39
d
Q11-40
b
Q11-41
c
Q11-42
c
Q11-43
bb
Q11-44
c
Q11-45
a
Q11-46
a
Q11-47
b
Chapter 11
($12,000 ÷ $4 par = 3,000 shares; $78,000 ÷ 3,000
shares = $26 per share
The Income Statement and the Statement of Stockholders’ Equity
11-31
Problems
(20-30 min.) P 11-48A
Req. 1
Crowley Cosmetics, Inc.
Income Statement
Year Ended December 31, 2012
Revenues and gains:
Sales revenue ......................................................
$540,000
Dividend revenue ................................................
13,000
Gain on lawsuit settlement .................................
7,000
Total revenues and gains ................................
560,000
Expenses and losses:
Cost of goods sold .............................................
$304,000
Selling expenses .................................................
82,000
General expenses ...............................................
71,900
Interest expense..................................................
23,000
Loss on sale of plant assets ..............................
11,000
Income tax expense ............................................
27,300
Total expenses and losses ..............................
519,200
Income from continuing operations………………
40,800
Income from discontinued operations,
$14,000, less income tax, $5,600 ........................
Income before extraordinary items .......................
8,400
49,200
Extraordinary loss, $29,000, less
income tax savings of $11,570 ...........................
Net income ..............................................................
11-32
Financial Accounting 9/e Solutions Manual
(17,430)
$ 31,770
(continued) P 11-48A
Req. 1 (continued)
Earnings per share:
Income from continuing operations
[($40,800 – $7,200*) / 21,000**]………………………………
Income from discontinued operations ($8,400 / 21,000)
$1.60
.40
Income before extraordinary gain
[($49,200 − $7,200) / 21,000]………………………………...
Extraordinary loss ($17,430 / 21,000)………………………...
Net income [($31,770 − $7,200) / 21,000]…………………….
_____
2.00
(.83)
$1.17
Computations:
*Preferred dividends: $90,000 × .08 = $7,200
**Common shares outstanding: 21,000 (24,000 issued – 3,000 treasury)
Req. 2
The company hoped to earn income from continuing operations equal
to 13% of sales. Income from continuing operations was only 7.56% of
sales ($40,800 / $540,000), which was less than the target earnings of
13% of sales.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-33
(10-15 min.) P 11-49A
Crowley Cosmetics, Inc.
Statement of Retained Earnings
Year Ended December 31, 2012
Retained earnings balance, December 31, 2011,
as originally reported…………………………………...
Prior-period adjustment (debit)…………………………..
$196,000
(7,000)
Retained earnings balance, December 31, 2011,
as adjusted………………………………………………..
189,000
Net income for 2012…………………………………………
31,770
220,770
Dividends for 2012……………………………………….....
Retained earnings balance, December 31, 2012……....
* Dividends for 2012: $26,000 + ($90,000 x 8%) = $33,200
11-34
Financial Accounting 9/e Solutions Manual
(33,200)*
$187,570
(10-15 min. — after working P 11-48A) P 11-50A
Estimated annual
Income from continuing
Estimated value
income in the future
operations ($40,800)
of Crowley
=
=
= $408,000
Investment
.10
common stock
capitalization rate
Current market value of
= $462,000 (21,000 shares* × $22 per share)
Crowley common stock
The investors would offer approximately $408,000. The owners of
Crowley Cosmetics probably would not accept $408,000 because their
outstanding stock is now worth around $462,000.
_____
*Issued shares…………………….
Less Treasury shares……….…. .
Outstanding shares……………...
Chapter 11
24,000
(3,000)
21,000
The Income Statement and the Statement of Stockholders’ Equity
11-35
(30-40 min.) P 11-51A
Req. 1
Journal
DATE
May
ACCOUNT TITLES AND EXPLANATION
DEBIT
1 Accounts Receivable (€80,000 × $1.35)…….
Sales Revenue……………………………...
108,000
10 Supplies…………………………………………
Accounts Payable (C$51,000 × $.76)……
38,760
17 Accounts Receivable (₤144,000 × $1.91)…..
Sales Revenue……………………………...
275,040
22 Cash (€80,000 × $1.38)………………………..
Accounts Receivable………………………
Foreign-Currency Transaction Gain…….
110,400
June 18 Accounts Payable………………………………
Cash (C$51,000 × $.75)…………………….
Foreign-Currency Transaction Gain…….
38,760
24 Cash (₤144,000 × $1.88)……………………….
Foreign-Currency Transaction Loss………..
Accounts Receivable………………………
270,720
4,320
108,000
38,760
275,040
108,000
2,400
38,250
510
275,040
Income statement (partial):
Other revenue and expense:
Foreign-currency transaction (loss), net
($2,400 + $510 - $4,320)………………………..
11-36
Financial Accounting 9/e Solutions Manual
CREDIT
$(1,410)
(continued) P 11-51A
Req. 2
This problem demonstrates that the final amount of a cash receipt or
cash payment on an international transaction may differ from the initial
dollar amount of the transaction. You can learn the need to hedge
receivable and payable positions denominated in foreign currencies.
This will help to minimize foreign-currency transaction losses.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-37
(25-35 min.) P 11-52A
Req. 1
Earnings per share:
Income from continuing operations
[($235,000 − $31,500*) / 119,000]………………………..
Loss on discontinued operations ($69,000 / 119,000)…..
$1.71
(.58)
Income before extraordinary items
[($166,000 − $31,500) / 119,000]………………………….
1.13
Extraordinary gain ($46,000 / 119,000)……………………..
.39
Net income [($212,000 − $31,500) / 119,000]………………
_____
$1.52
Computation:
*Preferred dividends: 14,000 × $2.25 = $31,500
Req. 2
Investment Capitalization Rates
9%
11%
13%
Estimated value
of CEL
common stock
=
$ 1.71
.09
$ 1.71
.11
$ 1.71
.13
=
$19.00
$15.55
$13.15
The 13% rate presumes the investment is the most risky. At this rate, the
investor is willing to pay the least for CEL stock.
11-38
Financial Accounting 9/e Solutions Manual
(30-40 min.) P 11-53A
Sunny Pie Foods, Inc.
Statement of Comprehensive Income
Year Ended June 30, 2012
Revenues:
Sales revenue ..................................................
Less:
$894,000
Sales returns ...................................
$20,000
Sales discounts ...............................
14,000
Net sales revenue ................................................
(34,000)
860,000
Expenses:
Cost of goods sold ..........................................
$400,000
Selling expenses .............................................
102,000
General expenses............................................
92,000
Income tax expense…………………………….
29,000
Total expenses ................................
623,000
Income from continuing operations ...................
237,000
Loss on discontinued operations, $25,000,
less income tax savings of $7,500 .................
Income before extraordinary item ......................
(17,500)
219,500
Extraordinary gain, $36,000, less
income tax of $10,800 .....................................
25,200
Net income ..........................................................
244,700
Other comprehensive income:
Unrealized loss on available-for-sale
investments, $10,000,less income tax savings
of $3,000………….............................................
Comprehensive income ......................................
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
(7,000)
$237,700
11-39
(continued) P 11-53A
Earnings per share:
Income from continuing operations ($237,000 / 10,000*)
$23.70
Loss on discontinued operations ($17,500 / 10,000)…….
(1.75)
Income before extraordinary item ($219,500 / 10,000)…..
21.95
Extraordinary gain ($25,200 / 10,000)………………………
2.52
Net income ($244,700 / 10,000)………………………………
$24.47
_____
Computation of common shares outstanding:
*17,000 shares issued − 7,000 treasury shares = 10,000 shares outstanding
11-40
Financial Accounting 9/e Solutions Manual
(25-35 min.) P 11-54A
Req. 1
Pretax accounting income of 2012.…………….
$170,000
+ Additional taxable income for income
earned in 2013 that is taxed in 2012………..
16,000
− Additional depreciation expense for
MACRS tax depreciation………………………
Taxable income of 2012.………………………….
(45,000)
$141,000
Req. 2
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
2012 Income Tax Expense ($170,000 × .40)…….
Income Tax Payable ($141,000 × .40)….
Deferred Tax Liability ($29,000 × .40)….
DEBIT
CREDIT
68,000
56,400
11,600
Req. 3
Mahoney Publications, Inc.
Income Statement
Year Ended December 31, 2012
Total revenue…………………………...
$900,000
Expenses:
Cost of goods sold………………...
$470,000
Operating expenses……………….
260,000
Income tax expense……………….
68,000
Total expenses……………………..
798,000
Net income……………………………...
$ 102,000
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-41
(15-20 min.) P 11-55A
Req. 1
Income before income tax:
$480 million
$480 million
=
= $800 million
1 – Tax rate
1 – .40
Req. 2
Par value of common stock:
$100 million par value
200 million shares
issued
=
$0.50 per
share
Req. 3
$220 million
received
Price per share of stock issuance:
= $1.10 per share
200 million shares
issued
Req. 4
Cost of treasury stock sold:
$ 7 million
Selling price of treasury stock sold:
$ 18 million
Increase in total stockholders’ equity:
$ 18 million
Req. 5
Stock dividend percentage:
11-42
$106 million
$430 million + $100 million
Financial Accounting 9/e Solutions Manual
= 20%
(20-30 min.) P 11-56B
Req. 1
Shaw Cosmetics, Inc.
Income Statement
Year Ended December 31, 2012
Revenues:
Sales revenue……………………………………………
$570,000
Dividend revenue……………………………………….
16,000
Gain on lawsuit settlement……………………………
10,000
Total revenues……………………………………
596,000
Expenses and losses:
Cost of goods sold…………………………………….. $316,000
Selling expenses………………………………………..
93,000
General expenses……………………………………....
81,000
Interest expense………………………………………...
25,000
Loss on sale of plant assets………………………….
15,000
Income tax expense…………………………………….
25,950
Total expenses and losses…………………….
555,950
Income from continuing operations…………………….
40,050
Income from discontinued operations,
$20,000, less income tax, $8,000…………………….
12,000
Income before extraordinary item………………………
52,050
Extraordinary loss, $34,000,
less income tax savings of $13,500…………….......
(20,500)
Net income…………………………………………………..
$ 31,550
.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-43
(continued) P 11-56B
Req. 1 (continued)
Earnings per share:
Income from continuing operations
[($40,050 – $1,800* / 25,000**………………………………..
$1.53
Income from discontinued operations ($12,000 / 25,000)….
.48
Income before extraordinary item
[($52,050 − $1,800) / 25,000]………………………………….
Extraordinary loss ($20,500 / 25,000)……………………........
Net income [($31,550 − $1,800) / 25,000]………………..........
_____
2.01
(.82)
$1.19
Computations:
*Preferred dividends: $30,000 x 6% = $1,800
**Common shares outstanding: 25,000 (30,000 issued - 5,000 treasury)
Req. 2
The company hoped to earn income from continuing operations equal
to 11% of sales. Income from continuing operations was only 7.03% of
sales ($40,050 / $570,000), which was less than the target earnings of
11% of sales.
11-44
Financial Accounting 9/e Solutions Manual
(10-15 min.) P 11-57B
Shaw Cosmetics, Inc
Statement of Retained Earnings
Year Ended December 31, 2012
Retained earnings balance, December 31, 2011
as originally reported…………………………………........
$197,000
Prior-period adjustment (debit)………………………………
(9,000)
Retained earnings balance, December 31, 2011
as adjusted…………………………………………………..
188,000
Net income for 2012……………………………………………
31,550
219,550
Dividends for 2012……………………………………………..
Retained earnings balance, December 31, 2012………….
(27,800)*
$191,750
* Dividends for 2012: $26,000 + ($30,000 x 6%) = $27,800
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-45
(10-15 min. — after working P 11-56B) P 11-58B
Estimated annual
Income from continuing
Estimated value
income in the future
operations ($40,050)
of Shaw
=
=
= $572,143
Investment
.07
common stock
capitalization rate
Current market value
of Shaw
common stock
= $450,000 (25,000 shares *× $18 per share)
The investors would offer approximately $572,143. The owners of Shaw
Cosmetics, Inc. would likely accept $572,143 because their outstanding
stock is worth $450,000.
_____
*Issued shares…………………...
Less Treasury shares……….…
Outstanding shares…………….
11-46
30,000
(5,000)
25,000
Financial Accounting 9/e Solutions Manual
(30-40 min.) P 11-59B
Req. 1
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
DEBIT
CREDIT
1 Accounts Receivable (€70,000 × $1.33)……..
Sales Revenue………………………………..
93,100
10 Supplies…………………………………………..
Accounts Payable (C$54,000 × $.72)……..
38,880
May
93,100
38,880
17 Accounts Receivable (₤140,000 × $1.93)…… 270,200
Sales Revenue……………………………….
270,200
22 Cash (€70,000 × $1.36)………………………….
Accounts Receivable………………………..
Foreign-Currency Transaction Gain……..
95,200
June 18 Accounts Payable……………………………….
Cash (C$54,000 × $.71)……………………..
Foreign-Currency Transaction Gain……..
38,880
93,100
2,100
38,340
540
24 Cash (₤140,000 × $1.90)………………………... 266,000
Foreign-Currency Transaction Loss…………
4,200
Accounts Receivable………………………..
270,200
Income statement (partial):
Other revenue and expense:
Foreign-currency transaction (loss), net
($2,100 + $540 − $4,200)…………………………………
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
$(1,560)
11-47
(continued) P 10-59B
Req. 2
This problem demonstrates that the final amount of a cash receipt or
cash payment on an international transaction may differ from the initial
dollar amount of the transaction. You can learn the need to hedge
receivable and payable positions denominated in foreign currencies.
This will help to minimize foreign-currency transaction losses.
11-48
Financial Accounting 9/e Solutions Manual
(20-25 min.) P 11-60B
Req. 1
Earnings per share:
Income from continuing operations
[($219,000 − $22,500) / 123,000]……………………………
$1.60
Loss on discontinued operations ($65,000 / 123,000)…….
(.53)
Income before extraordinary items
[($154,000 − $22,500) / 123,000]……………………………
1.07
Extraordinary gain ($49,000 / 123,000)………………………
.40
Net income [($203,000 − $22,500) / 123,000]………………..
_____
$1.47
Computations:
Preferred dividends: 10,000 × $2.25 = $22,500
Req. 2
Investment Capitalization Rates
6%
8%
10%
Estimated value
of BEL
common stock
=
$1.60
.06
$1.60
.08
$1.60
.10
=
$26.67
$20.00
$16.00
The 10% rate presumes the investment is the most risky. At this rate, the
investor is willing to pay the least for BEL stock.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-49
(30-40 min.) P 11-61B
Confection Pies, Inc.
Statement of Comprehensive Income
Year Ended June 30, 2012
Revenues:
Sales revenue...................................................
Less:
$904,000
Sales returns ....................................
$21,000
Sales discounts................................
12,000
Net sales revenue .................................................
Expenses:
(33,000)
871,000
Cost of goods sold ..........................................
$383,000
Selling expenses..............................................
103,000
General expenses ............................................
90,000
Income tax expense .........................................
33,000
Total expenses ...............................................
609,000
Income from continuing operations ...................
262,000
Loss on discontinued operations,
$28,000, less income tax saving, $8,400 ........
Income before extraordinary item .......................
(19,600)
242,400
Extraordinary gain, $44,000,
less income tax of $13,200……………….……
Net income ............................................................
30,800
273,200
Other comprehensive income:
Unrealized loss on available-for-sale
investments, $14,000, less income tax
savings, $4,200 ................................................
(9,800)
Comprehensive income .......................................
$263,400
11-50
Financial Accounting 9/e Solutions Manual
(continued) P 11-61B
Earnings per share:
Income from continuing operations ($262,000 / 20,000*)…
$13.10
Loss from discontinued operations ($19,600 / 20,000)……
(0.98)
Income before extraordinary item ($242,400 / 20,000)…….
12.12
Extraordinary gain ($30,800 / 20,000)………………………..
1.54
Net income ($273,200 / 20,000)...........................……………
_____
$13.66
Computation:
*28,000 shares issued − 8,000 treasury shares = 20,000 shares outstanding
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-51
(25-35 min.) P 11-62B
Req. 1
Pretax accounting income of 2012……………..
+ Additional taxable income for income
earned in 2013 but taxed in 2012…………….
− Additional depreciation expense for
MACRS tax depreciation………………………
Taxable income of 2012…………………………..
$140,000
14,000
(25,000)
$129,000
Req. 2
Journal
DATE
ACCOUNT TITLES AND EXPLANATION
Income Tax Expense ($140,000 × .32)…….
Income Tax Payable ($129,000 × .32)….
Deferred Tax Liability ($11,000 × .32)….
2012
DEBIT CREDIT
44,800
41,280
3,520
Req. 3
Johnson Publications, Inc.
Income Statement
For the Year 2012
Total revenue…………………………………..
$850,000
Expenses:
Cost of goods sold…………………………
Operating expenses……………………….
Income tax expense………………………..
Total expenses……………………………...
Net income……………………………………..
$470,000
240,000
44,800
754,800
$ 95,200
11-52
Financial Accounting 9/e Solutions Manual
(15-20 min.) P 11-63B
Req. 1
Income before income tax:
$350 million
$350 million
=
= $500 million
1 − Tax rate
1 − .30
Req. 2
Par value of common stock:
$80 million par value
40 million shares issued
= $2 per share
Req. 3
$180 million
received
= $4.50 per share
40 million shares
issued
Price per share of stock issuance:
Req. 4
Cost of treasury stock sold:
$7 million
Selling price of treasury stock sold:
$19 million
Increase in total stockholders’ equity:
$19 million
Req. 5
Stock dividend percentage:
Chapter 11
$55 million
$470 million + $80 million
The Income Statement and the Statement of Stockholders’ Equity
=
10%
11-53
Challenge Exercises and Problem
(20 min.) E11-64
Req. 1
The two components of accumulated other comprehensive income are:
1. Unrealized gains (losses) on available-for-sale investments.
2. Foreign-currency translation adjustments.
Req. 2
An unrealized gain (loss) on available-for-sale investments produces a
positive (negative) balance.
A foreign-currency translation adjustment is positive when the assets of
a foreign subsidiary are translated into more dollars than the equities
(liabilities plus stockholders’ equity).
The foreign-currency translation adjustment is negative when the
equities of a foreign subsidiary are translated into more dollars than the
assets.
Req. 3
Millions
Accumulated other comprehensive income (loss) at
December 31, 2012…………………………………………
$(57)
Foreign-currency translation adjustment………………..
25
Unrealized loss on available-for-sale investments……..
(15)
Accumulated other comprehensive income (loss) at
December 31, 2013…………………………………………
11-54
Financial Accounting 9/e Solutions Manual
$(47)
(20 min.) P 11-65
Req. 1
Operating
Transaction Income
Income
before
Tax
Net
Income
Earnings
per
Share
a.*
NE
NE
NE
NE
b.
+ $45,000
+ $45,000
+ $27,000
+
c.
NE
NE
NE
NE
d.
NE
- $3,000
- $1,800
-
e.
NE
NE
NE
-
f.
- $5,000
- $5,000
- $3,000
-
g.
NE
+ $20,000
+ $12,000
+
h.
NE
NE
NE
-
i.
NE
NE
NE
-
*Assuming the company uses the perpetual inventory method, the
omitted entry only affects balance sheet accounts (Inventory and
Accounts Payable).
Req. 2
Operating
Income
Totals
$440,000
Income
before
Tax
$507,000
Net
income
$304,200
Earnings
per
Share
$4.24*
*($304,200 - $50,000)/ (50,000 + 5,000 + 5,000)
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-55
Decision Cases
(15-20 min.) Decision Case 1
EPS to use for predicting future profits:
Unaudited EPS............................................................................
$1.19
Include:
Gain on sale of building ........................................................
.05
Restructuring expenses ........................................................
(.29)
Loss on lawsuit settlement ...................................................
(.12)
Lost income due to employee labor strike ..........................
(.24)
EPS to use for prediction ...........................................................
$0.59
Include all the preceding items for your prediction because all are
labeled by GAAP as normal business occurrences and are thus part of
income from continuing operations. None is an extraordinary item, and
none is part of discontinued operations.
Exclude the following items:
 unrealized loss on available-for-sale investments because this is not
even part of net income (it is included in comprehensive income).
 income from discontinued operations because that income will not be
part of this company in the next period and beyond.
11-56
Financial Accounting 9/e Solutions Manual
(15-20 min.) Decision Case 2
Magid’s earnings are of higher quality than those of Bay Area. Magid
follows more conservative (and more realistic) accounting policies than
Bay Area. Here are some examples:
SALES REVENUE
Magid records sales revenue when it receives a sale contract and a cash
down payment from a customer. In contrast, Bay Area records revenue
when it receives a sale contract regardless of whether Bay Area receives
a customer down payment or not. Therefore, Magid’s receivables appear
to be more collectible than Bay Area’s receivables, and as a result,
Magid’s revenues look stronger.
INSURANCE REVENUE
Magid records insurance revenue over the life of the policy, while Bay
Area records insurance revenue up front when the customer signs the
insurance contract. Magid’s policy is more realistic because both
companies earn the insurance revenue over the life of the contract as
they provide insurance coverage for policyholders. They do not earn the
revenue at the beginning of the contract period, which is when Bay Area
records the revenue.
Overall, Bay Area’s policies for recording revenue suggest that the
company may be overstating its revenue. Magid’s accounting policies
make Magid appear to be the safer investment.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-57
Ethical Issue
Req. 1
The ethical issue: Does it matter how a company reports its operating
results as long as the totals are accurate? May all items of income and
loss be combined or should items from recurring and non-recurring
sources be reported separately?
Req. 2 and Req. 3
The stakeholders in this case include the company, its officers and
directors, shareholders, prospective shareholders, and stock analysts.
Economic analysis: Prospective investors want to predict the level of
net income and cash flows that a company will generate from year to
year.
Continuing operations are more predictable than extraordinary
items and other non-recurring items. This is why extraordinary gains
and losses are highlighted on the income statement — to alert investors
and creditors of their special, nonrecurring nature. In this case, the
company and its existing stockholders could be helped economically by
management’s action. By hiding the extraordinary gain, the second
income statement makes the company look better than it really is. By
burying the extraordinary gain in income from continuing operations,
the second income statement makes it appear that Royal Bank can earn
more income each year than it really can. Projecting this rosy picture of
operations may enable the company to borrow on better terms, and its
stock price may temporarily perform better than it should. Lenders who
loan money to Royal Bank
11-58
Financial Accounting 9/e Solutions Manual
(continued) Ethical Issue
and stockholders who buy the company’s stock based on the second
income statement can be hurt. They may lend to the company on toofavorable terms, or they may pay too high a price for its stock. When the
truth comes out — in terms of actual results — Royal Bank may be
unable to pay its loans. Or the company’s stock price may fall, leaving
the new stockholders with stock worth less than they paid for it.
Legal analysis: Generally accepted accounting principles as well as the
SEC have legal and regulatory requirements for segregating recurring
items from non-recurring items.
To depart from these rules violates
International Financial Reporting Standards (IFRS) and can subject the
company and its officers to civil and possibly criminal penalties.
Ethical analysis:
The action being considered by Royal Bank is not
truthful. It violates the rights of prospective shareholders and creditors
to all the information they need about the company to make informed
decisions.
Req. 4
The bank should report their results of operations in a way that
separates the recurring from the non-recurring items. This course of
action is not only the legal and ethical thing to do, but in the long run it
is also in the best economic interest of the company, its management,
and its existing shareholders.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-59
Focus on Financials: Amazon.com, Inc.
(20-30 min.)
Req. 1
Amazon.com, Inc.’s income statement does not mention income from
continuing operations because there are no special items of income,
such as discontinued operations. All of Amazon.com, Inc.’s net income
results from continuing operations.
Amazon.com’s net sales revenue increased from 2008-2010.
Cost of
sales increased at approximately the same rate resulting in the same
gross profit rate all three years. Income from operations also increased
each year. The quality of Amazon’s earnings appears high.
Req. 2
Investment Capitalization Rates
5%
6%
7%
Estimated value
$2.58
of a share of
=
= $51.60
.05
Amazon stock
Safe investment
$2.58
= $43.00
.06
$2.58
= $36.86
.07
Risky investment
Req. 3
Student answers will vary depending on when this problem is assigned.
During 2011, Amazon’s stock traded between $176 and $222.
If a
student used a price of $200, this would be equivalent to capitalizing
earnings at about 1.2%, making Amazon.com, Inc. a very safe
investment.
11-60
Financial Accounting 9/e Solutions Manual
Focus on Analysis: RadioShack, Corp.
(30 min.)
Req. 1
RadioShack, Corp.’s statement of operations shows that the company
has been profitable for the last three years, but the percentage profit has
declined slightly from 2009 (4.8% to 4.6%). This decrease is largely due
to a decrease in the gross profit rate. The statement of operations does
report consistent growth in sales, operating income, and net income.
Req. 2
4%
Estimated
value
$1.71
=
= $42.75
of a share of
.04
RadioShack,
stock
Investment Capitalization Rate
6%
8%
10%
$1.71
$1.71
$1.71
= $28.50
= $21.38
= $17.10
.06
.08
.10
Low Risk
High Risk
Req. 3
During 2011, RadioShack’s stock traded between $12 and $19.
The
estimate at 10% is closest to the actual price of the stock. At a price of
$15, the capitalization rate would be around 11%.
Chapter 11
The Income Statement and the Statement of Stockholders’ Equity
11-61
Group Project
1-2 hours
Student responses on this problem will vary.
11-62
Financial Accounting 9/e Solutions Manual