Audio Affection, Inc. sells automotive and home stereo equipment. It has 50,000 shares of $100 par common
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Audio Affection, Inc. sells automotive and home stereo equipment. It has 50,000 shares of $100 par common stock outstanding and 10,000 shares of $2, $100 par cumulative preferred stock outstanding as of December 31, 2006. List the errors you find in the following income statement for the year ended December 31,2006.
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Audio Affection, Inc. Income Statement For the Year Ended December 31, 2006 $9,450,000 7,100,000 $2,350,000 Operating expenses: Administrative expenses . . . .320,000 1,140,000 1,210,000 420,000 790,000 Income from continuing operations before income tax........... . Cumulative effect on prior years' income (decrease) of changing to a different depreciation method (204,000) (30,000) Income before condemnation of land, restructuring charge, 556,000 Extraordinary items: Gain on condemnation of land, net of applicable 120,000 (59,500) Restructuring charge, net of applicable income tax of $25,500.... Loss on discontinued operations (net of applicable (184,000) 432,500 Net income Ear nings per common share: Income from continuing operations . . . .._ . . . . Cumulative effect on prior years' income (decrease) of S 15.80 Fixed asset impairment Income before extraordinary item and discontinued operations Extraordinary items: (4.08) (0.60) 11.12 . 2.40 Restructuring charge . (3.68) 5 8.65
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1 The order of presentation of the unusual items is incorrect The order should be as follows Income from continuing operations Loss on discontinued op...View the full answer
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Related Book For
Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
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