CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 15-1

Preparing an Income Statement

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

2

LESSON 15-1

INCOME STATEMENT INFORMATION ON A WORK SHEET page 448

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

3

LESSON 15-1

6. Contra account amounts

REVENUE SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS

1

2

3 4

5

6 78 9

1. Heading

7. Contra account total

3. Title of revenue account 8. Net Sales

4. Sales amount 9. Net sales amount

5. Less contra accounts

2. Revenue section

page 449

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

4

LESSON 15-1

COST OF MERCHANDISE SOLD SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS

1

23

page 450

465

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

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

5

LESSON 15-1

COMPLETING AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS

1

2

4

5

page 452

7

36

7. Component percentage

6. Double lines

5. Net Income after Federal Income Tax

4. Less Federal Income Tax Expense

3. Net Income before Federal Income Tax

2. Expenses section

1. Gross Profit on Sales

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

6

LESSON 15-1

TERMS REVIEW

net sales cost of merchandise sold gross profit on sales

page 454

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 15-2

Analyzing an Income Statement

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

8

LESSON 15-2

ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

9

LESSON 15-2

Price-EarningsRatio

=Earnings

perShare

÷Market Price

per Share

Earningsper Share

=Number of

SharesOutstanding

÷Net Incomeafter FederalIncome Tax

FINANCIAL RATIOS page 459

Earnings per Share

Price-Earnings Ratio

$32.13=2,500÷$80,313.95

10.7=$32.13÷$345.00

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

10

LESSON 15-2

TERMS REVIEW

financial ratio earnings per share price-earning ratio

page 460

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 15-3

Preparing a Statement of Stockholders’ Equity

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

12

LESSON 15-3

CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY

12

34

5

page 461

1. Heading

2. Capital Stock and Par Value

5. Total stock issued at the end of the year

3. Stock at the beginning of the year

4. Stock issued during the year

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

13

LESSON 15-3

RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY

123

4

page 462

4. Dividends declared

6

7

5

2. Beginning balance

7. Total stockholders’ equity6. Ending balance3. Net income after federal

income tax

5. Increase in retained earnings1. Retained Earnings

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

14

LESSON 15-3

TERMS REVIEW

statement of stockholders’ equity par value

page 463

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 15-4

Preparing a Balance Sheet

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

16

LESSON 15-4

BALANCE SHEET INFORMATION ON A WORK SHEET page 464

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

17

LESSON 15-4

CURRENT ASSETS SECTION OF A BALANCE SHEET

1

2

3

4

5

page 465

3. Book value of accounts receivable

4. Remaining current asset accounts1. Heading

2. Begin assets section 5. Current assets

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

18

LESSON 15-4

PLANT ASSETS SECTION OF A BALANCE SHEET

1

2

3

page 466

4

51. Write the heading Plant Assets.

2. Calculate the book value of office equipment.

3. Use the same procedure to calculate the book value of store equipment.

4. Calculate total plant assets.

5. Calculate total assets.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

19

LESSON 15-4

LIABILITIES SECTION OF A BALANCE SHEET

1

3

page 467

1. Heading

2. Account title and amount of each current liability

3. Total liabilities

2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

20

LESSON 15-4

STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET

1

page 468

5. Total liabilities and stockholders’ equity

4

5

23

2. Capital stock

1. Stockholders’ Equity

3. Retained earnings

4. Total stockholders’ equity

6. Double rules6

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

21

LESSON 15-4

COMPLETED BALANCE SHEET page 469

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

22

LESSON 15-4

COMPLETED BALANCE SHEET page 469

(continued from previous slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

23

LESSON 15-4

TERMS REVIEW

current liabilities long-term liabilities supporting schedule

page 471