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1. DEVRY ACCT 550 Week 2 Homework
Assignment
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ACCT 550 Week 2 Homework Assignment
E4-4 (Multiple-Step and Single-Step) Two accountants for the firm of Allen and
Wright are arguing about the merits of presenting an income statement in a
multiple-step versus a single-step format. The discussion involves the following
2012 information related to Webster Company ($000 omitted).
Administrative expense
Officers’ salaries $ 4,900
Depreciation of office furniture and equipment 3,960
Cost of goods sold 63,570
Rent revenue 17,230
Selling expense
Transportation-out 2,690
Sales commissions 7,980
Depreciation of sales equipment 6,480
Sales revenue 96,500
Income tax expense 7,580
Interest expense 1,860
Instructions

2. (a) Prepare an income statement for the year 2012 using the multiple-step form.
Common shares outstanding for 2012 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2012 using the single-step form.
(c) Which one do you prefer? Discuss.
E4-12 (Earnings per Share) At December 31, 2011, Schroeder Corporation had the
following stock outstanding.
8% cumulative preferred stock, $100 par, 107,500 shares $10,750,000
Common stock, $5 par, 4,000,000 shares 20,000,000
During 2012, Schroeder did not issue any additional common stock. The following
also occurred during 2012.
Income from continuing operations before taxes $21,650,000
Discontinued operations (loss before taxes) 3,225,000
Preferred dividends declared 860,000
Common dividends declared 2,200,000
Effective tax rate 35%
Instructions
Compute earnings per share data as it should appear in the 2012 income statement
of Schroeder Corporation. (Round to two decimal places.)
P4-1 (Multiple-Step Income, Retained Earnings) Presented below is information
related to Dickinson Company for 2012.
Retained earnings balance, January 1, 2012 $ 980,000
Sales revenue 25,000,000
Cost of goods sold 16,000,000
Interest revenue 70,000
Selling and administrative expenses 4,700,000
Write-off of goodwill 820,000
Income taxes for 2012 1,244,000
Gain on the sale of investments (normal recurring) 110,000
Loss due to flood damage—extraordinary item (net of tax) 390,000
Loss on the disposition of the wholesale division (net of tax) 440,000

3. Loss on operations of the wholesale division (net of tax) 90,000
Dividends declared on common stock 250,000
Dividends declared on preferred stock 80,000
Instructions
Prepare a multiple-step income statement and a retained earnings statement.
Dickinson Company decided to discontinue its entire wholesale operations and to
retain its manufacturing operations. On September 15, Dickinson sold the wholesale
operations to Rogers Company. During 2012, there were 500,000 shares of common
stock outstanding all year.