The document contains information about the Radiance Software company's operations in 2011 including net sales, costs, operating income, losses, prior period adjustments, and cash dividends declared. It also provides the number of common and preferred shares outstanding. The instructions are to prepare a summarized income statement for 2011 including earnings per share, and a retained earnings statement as of December 31, 2011 using the original retained earnings from 2010. Additional questions provide financial information for other companies and require the preparation of owner's/stockholder's equity statements.
The document contains information about the Radiance Software company's operations in 2011 including net sales, costs, operating income, losses, prior period adjustments, and cash dividends declared. It also provides the number of common and preferred shares outstanding. The instructions are to prepare a summarized income statement for 2011 including earnings per share, and a retained earnings statement as of December 31, 2011 using the original retained earnings from 2010. Additional questions provide financial information for other companies and require the preparation of owner's/stockholder's equity statements.
The document contains information about the Radiance Software company's operations in 2011 including net sales, costs, operating income, losses, prior period adjustments, and cash dividends declared. It also provides the number of common and preferred shares outstanding. The instructions are to prepare a summarized income statement for 2011 including earnings per share, and a retained earnings statement as of December 31, 2011 using the original retained earnings from 2010. Additional questions provide financial information for other companies and require the preparation of owner's/stockholder's equity statements.
The document contains information about the Radiance Software company's operations in 2011 including net sales, costs, operating income, losses, prior period adjustments, and cash dividends declared. It also provides the number of common and preferred shares outstanding. The instructions are to prepare a summarized income statement for 2011 including earnings per share, and a retained earnings statement as of December 31, 2011 using the original retained earnings from 2010. Additional questions provide financial information for other companies and require the preparation of owner's/stockholder's equity statements.
a. For the period of 2011 prepare the summarized income statement, including the figures of earning per share. The Radiance software company has “19000 shares $1 par value of common stock and has 70000 share of $6.25, $100 par value preferred stock shares are outstanding all over the year.”
b. From the above data also prepared the retained earnings statement for the ended year 31, December, 2011. By means of originally recorded, retained earnings at 31 December, 2010, that is amounted to $7,285,000.
PART A
Radiance software company
Summarized Income Statement
For the year 2011
NAJEEBULLAH(10369) Page 2 Income from continuing operation 275000
Cost and Expenses
Less: Loss from 1,00,000
Income before Income tax 175000
Less:Income tax expense 70,000
Net Income 105000
PART B
Radiance software company
Retained Earning Statement
For 31 december 2011
Retained earning at the beginning 7285000
Add: Net Income 105000
Total retain earning 7390000
Less: Dividends ( 951,000)
Retained earning at the end 6439000”
Q.2 The total assets of the Shah Taj company $140,000 and the total liabilities are $84,000. Then, what is the retained earnings of Shah Taj company if the capital stock is $50,000?
NAJEEBULLAH(10369) Page 3 Assets $140,000
Liabilities $84000
Capital $50000
Stock holder’s equity : Assets - Liabilities
Stock holder’s equity= $140,000 - $84000
= $ 56000
We know that
Equity = Capital stock +retained earning
Retained earning = Equity - Capital stock
Retained earning = $56000 - $50000
Retained earnings = $ 6000.
Q.3 How do the statement of owner’s equity is calculated?
A Statement of Owner's Equity;
A Statement of Owner's Equity (SOE) shows the owner's capital at the start of the period,he changes that affect capital, and the resulting capital at the end of the period. It is also known as "Statement of Changes in Owner's Equity".
How to calculate SOE:
First put a three line heading
The first line shows the name of the company; second the title of the report; and third the period covered.
Then add CAPITAL account in the beginning
Add additional contribution
Add net Income
Less Drawings made
NAJEEBULLAH(10369) Page 4 And You will have a capital by the end of the time period.
ABC CORPORATION
STATEMENT OF STOCK HOLDER”S EQUITY
FOR THE YEAR ENDED ***
Capital – beginning $5,000
Add:Additional Contributions $1,000
Net Income $2,000
Total$ $8,000
Less: Drawings $2,000
Capital – ending$ $6,000
Q.4 The ABC INC, has $5000 capital at the opening period. The owner, Chen has added $1000 cash to paid in capital and earned from the sales $2000. The business owner has also withdrawn the $2000 for the payment of the personal expenses. The statement of owner’s equity resulting has shown an ending balance of capital $6000. Ending balance of equity will be carry forward to the following period and will become the opening balance .
Requirement:
Prepare the statement of owner’s equity.
Data: Capital = $5,000
Contributions = $1,000
Net Income = $2,000
Drawing = $2,000
Ending Balance = $6,000
ABC INC, Company
Statement of Owner’s Equity For the year ended XXX
Chen, Capital $5,000
NAJEEBULLAH(10369) Page 5 Additional contributions $1,000 Net Income $2,000 $3,000 Less Withdrawals $2,000 Increase in Owner’s Equity $1,000 Chen, Capital $6,000
Q.6 Wolfa Company has outstanding two classes of $100 par value stock: 5000 shares of 8%cumulative preferred and 25,000 shares of common. The company had a $50,000 retained earnings at the beginning of the current year, and preferred dividends had not been paid for two years. During the current year, the company earned $300,000. What will be the balance in retained earnings at the end of the current year, if the company pays a dividend of $2 per share on the common stock?
