CENTURY 21 ACCOUNTING © Thomson/South-Western

Chapter 15Chapter 15

Preparing an Income Statement

Mr. Hunter

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INCOME STATEMENT INFORMATION INCOME STATEMENT INFORMATION ON A WORK SHEETON A WORK SHEET page 448

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6. Contra account amounts

REVENUE SECTION OF AN INCOME STATEMENT REVENUE SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESSFOR A MERCHANDISING BUSINESS page 449

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

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COST OF MERCHANDISE SOLD SECTION OF AN COST OF MERCHANDISE SOLD SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING INCOME STATEMENT FOR A MERCHANDISING BUSINESSBUSINESS page 450

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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COMPLETING AN INCOME STATEMENT COMPLETING AN INCOME STATEMENT FOR A MERCHANDISING BUSINESSFOR A MERCHANDISING BUSINESS page 452

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 © Thomson/South-Western

LESSON 15-2LESSON 15-2

Analyzing an Income Statement

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ANALYZING AN INCOME STATEMENT ANALYZING AN INCOME STATEMENT SHOWING A NET LOSSSHOWING A NET LOSS page 457

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Price-EarningsRatio

=Earnings per

Share÷

Market Priceper Share

Earningsper Share

=Number of

SharesOutstanding

÷Net Income

after FederalIncome Tax

FINANCIAL RATIOSFINANCIAL 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 © Thomson/South-Western

LESSON 15-3LESSON 15-3

Preparing a Statement of Stockholder’s Equity

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CAPITAL STOCK SECTION OF THE STATEMENT CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITYOF STOCKHOLDERS’ EQUITY 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

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RETAINED EARNINGS SECTION OF THE RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITYSTATEMENT OF STOCKHOLDERS’ EQUITY page 462

4. Dividends declared2. Beginning balance

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

income tax

5. Increase in retained earnings1. Retained Earnings

CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 15-4LESSON 15-4

Preparing a Balance Sheet

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BALANCE SHEET INFORMATION ON A BALANCE SHEET INFORMATION ON A WORK SHEETWORK SHEET page 464

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CURRENT ASSETS SECTION OF A CURRENT ASSETS SECTION OF A BALANCE SHEETBALANCE SHEET page 465

3. Book value of accounts receivable

4. Asset accounts1. Heading

2. Begin assets section 5. Current assets

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PLANT ASSETS SECTION OF A PLANT ASSETS SECTION OF A BALANCE SHEETBALANCE SHEET page 466

1. 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.

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LIABILITIES SECTION OF A BALANCE LIABILITIES SECTION OF A BALANCE SHEETSHEET page 467

1. Heading

2. Account title and amount of each current liability

3. Total liabilities

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STOCKHOLDERS’ EQUITY SECTION OF A STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEETBALANCE SHEET page 468

5. Total liabilities and stockholders’ equity2. Capital stock

1. Stockholders’ Equity

3. Retained earnings

4. Total stockholders’ equity

6. Double rules

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COMPLETED BALANCE SHEETCOMPLETED BALANCE SHEET page 469

(continued on next slide)

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COMPLETED BALANCE SHEETCOMPLETED BALANCE SHEET page 469(continued from previous

slide)

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Chapter ScheduleChapter 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)