Question

Laidig Industries has prepared the following unadjusted trial balance as of December 31, 2015:


ADDITIONAL INFORMATION:
1. A physical count of inventory on December 31, 2015, indicated that the company had $480,000 of inventory on hand.
2. An aging of accounts receivable indicates that $75,000 is uncollectible.
3. The company uses straight-line depreciation. The assets have a ten-year life and zero salvage value.
4. The company used a third of the remaining insurance policy during 2015.
5. The company pays interest for its bond payable on December 31 of every year. The coupon rate and the effective rate are both 10 percent per year.
6. The company’s tax rate is 35 percent. All income tax charges are recorded at the end of the year.
7. 200,000 shares of common stock were outstanding during 2015.

REQUIRED:
Prepare the following:
a. The necessary adjusting and closing entries on December 31, 2015.
b. An income statement including recommended earnings-per-share disclosures.
c. A reconciliation of retained earnings.
d. In terms of the objectives of financial accounting, discuss the usefulness of the various measures of income included on thestatement.


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  • CreatedAugust 19, 2014
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