Exercise 48 Presented below are selected ledger accounts of

Exercise 4-8 Presented below are selected ledger accounts of Pharoah Corporation as of December 31, 2017 Cash Administrative expenses Selling expenses Net sales Cost of goods sold Cash dividends declared (2017) Cash dividends paid (2017) Discontinued operations (loss before income taxes) Depreciation expense, not recorded in 2016 Retained earnings, December 31, 2016 Effective tax rate 30% $60,400 101,200 82,920 553,300 261,600 23,330 23,900 47,700 38,600 94,760 Compute net income for 2017 Net income LINK TO TEXT LINK TO TEXT Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 20,810 shares of common stock were outstanding during 2017. (Round earnings per share to 2 decimal places, e.g. 1.58.)

Solution

Computation of Net Income Net Sales $ 553,300.00 Less Cost of good sold $ 261,600.00 Less Administrative expense $ 101,200.00 Less selling expense $    82,290.00 Income before tax $ 108,210.00 Less Tax @30% $    32,463.00 Net Income after tax $    75,747.00 Income statement Net Sales $553,300.00 Less Cost of good sold $261,600.00 Less Administrative expense $101,200.00 Less selling expense $82,290.00 Income before tax for contnuing operation $108,210.00 Less Loss from discontinued operation $47,700.00 Net Income $60,510.00 Prior period depreciation expense $38,600.00 Earning available $21,910.00 Cash dividend declared $23,330.00 Dividend paid through current earning $21,910.00 Dividend paid through existing retained earning $1,420.00