LESSON 13-1

1. LESSON 13-1 Work Sheet for a Corporation

2. ORGANIZATION EXPENSE ADJUSTMENT page 371 2 1 1. Increase the expense. 2. Decrease the asset. LESSON 13-1

3. FEDERAL INCOME TAX EXPENSE ADJUSTMENT page 371 2 1 1. Increase the expense. 2. Increase the liability. LESSON 13-1

4. Income Statement Debit Column Total before Federal Income Tax Income Statement Credit Column Total Net Income before Federal Income Tax – = – $883,782.75 $752,647.48 = $131,135.27 CALCULATING FEDERAL INCOME TAX EXPENSE page 372 Calculating Net Income before Federal Income Tax LESSON 13-1

5. Net Income before Taxes Federal Income Tax Amount  Tax Rate =  $ 50,000.00 15% = $ 7,500.00  Plus 25,000.00 25% = 6,250.00  Plus 25,000.00 34% = 8,500.00  Plus 31,135.27 39% = 12,142.76 $131,135.27 $ 34,392.76 CALCULATING FEDERAL INCOME TAX EXPENSE page 372 Calculating Federal Income Tax Amount LESSON 13-1

6. Total FederalIncome Tax Expense Estimated Federal Income Tax Already Paid Accrued Federal Income Tax Expense – = – $34,392.76 $32,000.00 = $2,392.76 CALCULATING FEDERAL INCOME TAX EXPENSE page 372 Calculating Accrued Federal Income Tax Expense LESSON 13-1

7. CORPORATE WORK SHEET page 374 LESSON 13-1

8. CORPORATE WORK SHEET page 375 LESSON 13-1

9. TERM REVIEW page 376 • amortization LESSON 13-1

10. LESSON 13-2 Financial Statements and Analysis

11. INCOME STATEMENT FOR A CORPORATION page 377 LESSON 13-2

12. INCOME STATEMENT FOR A CORPORATION page 377 LESSON 13-2

13. ACCEPTABLE AND ACTUAL COMPONENT PERCENTAGES page 378 LESSON 13-2

14. Preferred Stock’s Share of Net Income  Total Par Value Dividend Rate =  $170,000.00 8% = $13,600.00 SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCK page 378 Calculating Share of Net Income for Preferred Stock LESSON 13-2

15. Preferred Stock’s Share of Net Income Common Stock’s Share of Net Income  Total Net Income =  $96,742.51 $13,600.00 = $83,142.51 SHARE OF NET INCOME ASSIGNED TO COMMON STOCK page 378 Calculating Share of Net Income for Preferred Stock LESSON 13-2

16. Share of Net Income Shares of Stock Outstanding ÷ = Earnings per Share ÷ $83,142.51 31,950 = $2.60 EARNINGS PER SHARE page 379 Calculating Earnings per Share LESSON 13-2

17. 1. Paid-in capital section 2. Retained earnings section STATEMENT OF STOCKHOLDERS’ EQUITY FOR A CORPORATION page 379 LESSON 13-2

18. Total Stockholders’ Equity Shares of Capital Stock Outstanding Equity per Share ÷ = ÷ Preferred $170,000.00 1,700 = $100.00 ÷ Common 448,655.86 31,950 = 14.04 Total $618,655.86 ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380 Calculating Equity per Share LESSON 13-2

19. Market Priceper Share Earnings per Share Price-Earnings Ratio ÷ = ÷ $19.50 $2.60 = 7.5 times ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380 Calculating Price-Earnings Ratio LESSON 13-2

20. BALANCE SHEET FOR A CORPORATION page 381 LESSON 13-2

21. BALANCE SHEET FOR A CORPORATION page 381 LESSON 13-2

22. Accounts Receivable Beginning Balance – Allowance for Uncollectible Accounts Beginning Balance = Beginning Book Value $124,983.89 – $4,362.18 = $120,621.71 Accounts Receivable Ending Balance – Allowance for Uncollectible Accounts Ending Balance = Ending Book Value $135,234.54 – $6,697.63 = $128,536.91 Beginning Book Value of Accounts Receivable + Ending Book Value of Accounts Receivable ÷ 2 = Average Book Value of Accounts Receivable ($120,621.71 + $128,536.91) ÷ 2 = $124,579.31 ACCOUNTS RECEIVABLE TURNOVER RATIO page 382 Calculating the average book value of accounts receivable LESSON 13-2

23. Average Book Value of Accounts Receivable Accounts Receivable Turnover Ratio Net Sales on Account ÷ = ÷ $861,356.72 $124,579.31 = 6.9 times ACCOUNTS RECEIVABLE TURNOVER RATIO page 382 Calculating the accounts receivable turnover ratio LESSON 13-2

24. Accounts Receivable Turnover Ratio Average Number of Days for Payment ÷ Days in Year = ÷ 365 6.9 = 53 ACCOUNTS RECEIVABLE TURNOVER RATIO page 382 Calculating the average number of days for payment LESSON 13-2

25. Net Incomeafter FederalIncome Tax ÷ AverageStockholders’Equity = Rate Earnedon Average Stockholders’ Equity $96,742.51 ÷ $498,622.11 = 19.4% January 1 Stockholders’ Equity + December 31 Stockholders’ Equity ÷ 2 = Average Stockholders’ Equity ($378,588.35 + $618,655.86) ÷ 2 = $498,622.11 RATE EARNED ON AVERAGE STOCKHOLDERS’ EQUITY page 383 Calculate average stockholders’ equity Calculate the rate earned LESSON 13-2

26. Net Incomeafter FederalIncome Tax ÷ AverageTotal Assets = Rate Earned onAverage Total Assets $96,742.51 ÷ $838,573.69 = 11.5% January 1Total Assets + December 31Total Assets ÷ 2 = AverageTotal Assets ($724,976.34 + $952,171.03) ÷ 2 = $838,573.69 RATE EARNED ON AVERAGE TOTAL ASSETS page 383 Calculate average total assets Calculate the rate earned LESSON 13-2

27. TERMS REVIEW page 365 • earnings per share • equity per share • market value • price-earnings ratio • rate earned on average stockholders’ equity • rate earned on average total assets LESSON 13-2

28. LESSON 13-3 Other End-of-Fiscal-Period Work

29. ADJUSTING ENTRIES page 386 LESSON 13-3

30. ADJUSTING ENTRIES page 386 LESSON 13-3

31. CLOSING ENTRIES page 387 Need art form page 397. LESSON 13-3

32. POST-CLOSING TRIAL BALANCE page 388 LESSON 13-3

33. POST-CLOSING TRIAL BALANCE page 388 LESSON 13-3

34. REVERSING ENTRIES page 389 LESSON 13-3

35. FEDERAL INCOME TAX RETURN page 390 LESSON 13-3

36. FEDERAL INCOME TAX RETURN page 390 LESSON 13-3