Income Statement for fiscal year ended December 31,2020. Sales: $201,000 - COGS: 106,000 - Gross Margin: 95,000
Question:
Income Statement for fiscal year ended December 31,2020.
Sales: $201,000
- COGS: 106,000
- Gross Margin: 95,000
- Salaries & Wages Exp.: 70,000
- Utilities Exp.: 13,000
- Income before tax: 12,000
- Income tax: 3,000
- Net Income: 39,000
The following December 2020 transactions were not recorded:
A) Dec. 1st, Johnson issued $500,000 of 6% convertible bonds due Dec. 1 2025, with int. payable semiannually on Dec.1 and May. 1. Bonds are convertible into 50,000 common shares. No conversion has been made as of Dec.31.
B) Dec. 5th, Johnson purchased as trading investment, $80,000 of the 9% 5-year bonds of Acme Inc. for $74,086 that provides 11% return. Bonds pay interest annually and Johnson uses effective interest method for amortizing any discount or premium. Fair value of bonds at Dec. 31, 2020 is $75,000.
C) Dec. 10th, Johnson purchased 500 shares of Masters Corp. common stock for $50/share (corp had 150,000 outstanding shares throughout 2020). Dec. 15th, Johnson sold 100 shares of Masters Corp. common stock for $52/share. Fair value of common stock at Dec.31, 2020 is $55/share.
D) Dec. 20th, Johnson purchased at par, as held-to-maturity investment, $30,000 of 8% 5-year bonds of Delco company. Bonds pay interest semiannually. Fair value of bonds Dec. 31, 2020 is $29,500.
Additional Info: Jan. 1st, 2020 Johnson had 20,000 common shares outstanding. - Oct. 1st, 2020 an additional 10,000 shares issued. - Tax rate is 25%.
REQUIRED:
a) Prepare all journal entries for December.
b) prepare all adjusting entries for December.
c) prepare final multistep income statement and statement of other comprehensive income.
d) compute basic and diluted earnings per share. Include applicable earrings per share information in good from on income statement.
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta