E4-8a) Prepare a multi-step income statement

BROKAW CORP.Income Statement

Year Ended December 31, 2012

SalesCOGS (780,000 + 80,000)Gross Profit

Selling ExpensesAdministrative ExpensesTotal Expenses

Income from operations

Dividends RevenueInterest RevenueIncome from continuing operations before income tax

Income Tax

Income before extraordinary items

Casualty loss (net of tax)NET INCOME

PER SHARE OF COMMON STOCK:Continuing operations (167,640:60,000)Extraordinary item (net of tax) (33,000:60,000)Net income

b) Prepare Retained Earnings Statement

Retained Earnings StatementFor the year ended December 31, 2012

Retained Earnings 01/11/12Correction of omitted depreciation (net of tax)Adjusted retained earnings 01/11/12

Add net income

Less dividends declaredRetained earnings 12/31/12

E4-15SALES REVENUECOGSOperating expensesUnrealized holding lossCash dividends declaredCommon stockAccumulated OCIRetained Earnings

Statement of Shareholders' EquityYear ended December 31, 2012

TotalBeginning balance $ 520,000.00 Comprehensive Income

Net income $ 170,000.00 OCI: Unrealized gains $ (50,000.00)

Comprehensive IncomeDividends $ (10,000.00)

Ending balance $ 630,000.00

BROKAW CORP.Income Statement

Year Ended December 31, 2012

$ 1,200,000.00 $ (860,000.00) $ 340,000.00

$ (65,000.00) $ (48,000.00) $ (113,000.00)

$ 227,000.00

$ 20,000.00 $ 7,000.00

Income from continuing operations before income tax $ 254,000.00

$ (86,360.00)

$ 167,640.00

$ (33,000.00) $ 134,640.00

Continuing operations (167,640:60,000) $ 2.79 Extraordinary item (net of tax) (33,000:60,000) $ (0.55)

$ 2.24

BROKAW CORP.Retained Earnings Statement

For the year ended December 31, 2012

$ 980,000.00 Correction of omitted depreciation (net of tax) $ (26,400.00)Adjusted retained earnings 01/11/12 $ 953,600.00

$ 1,088,240.00

$ (45,000.00) $ 1,043,240.00

$ 750,000.00 $ 500,000.00 $ 80,000.00 $ 50,000.00 $ 10,000.00 $ 350,000.00 $ 80,000.00 $ 90,000.00

BRYANT CO.Statement of Shareholders' Equity

Year ended December 31, 2012

Comprehensive Income

$ 170,000.00 $ (50,000.00)

$ 120,000.00

Retained Earnings Accumulated OCI $ 90,000.00 $ 80,000.00

$ 170,000.00 $ (50,000.00)

$ (10,000.00)

$ 250,000.00 $ 30,000.00

Common Stock $ 350,000.00

$ 350,000.00