NAME: MUKARRAM ALI SIDDIQUI (18020)

TOPIC: FINANCIAL STATEMENTS ON CORPORATION

Q No 1 Part (A)

The Radiance Software Company

Condensed Income Statement
For The Year Ended December 31, 2011

Net sales 19,860,000

Less: Costs and other expenses (16,901,000)
Income for continuing operations 2959000

Discontinuing Operation:
Operating income during 2011 141,000
Less: Loss on disposal of discontinued segment (551,000)
Loss from discontinued operations (net of income tax (410000)
benefits) 2549000
Income before extraordinary items
Extraordinary loss (net of income tax benefit) (901,000)
NET INCOME 1648000

Earnings Per Share Of Common Stock:

Earnings from continued operations 132.71*
Loss from discontinued operations (21.5)
Income before extraordinary items 111.13*
Extraordinary loss (47.42)
NET EARNINGS $63.71*
COMPUTATION:

EPS= NI- Current year preferred dividends / Number of shares

*Earning from continued operations = 2959000 – 437500 / 19000

= 132.71

*Income before extraordinary items = 2549000 - 437500 / 19000

= 111.13

*Net Earnings = 1648000 - 437500 / 19000

= 63.71
Q No 1 Part (B)

The Radiance Software Company

Statement Of Retained Earning
For The Year Ended December 31, 2011

Retained earnings, Dec. 31, 2010 7,285,000

As originally reported………………
Less: Prior period adjustment (increase in 2010 (351,000)
depreciation expense, net of income tax benefit)
As restated 6934000
Net Income for 2011 1648000
Subtotal 8582000
Less: Dividends
Cash dividends declared (951,000)
Retained earnings, Dec. 31, 2011 7631000

Q.2 The total assets of the Shah Taj company $140,000 and the total liabilities are
$84,000. Then, what is the retained earnings of Shah Taj company if the capital
stock is $50,000?
Ans:
Balance Sheet

Assets = Liabilities + Owners’ Equity

Total Assets 140,000. = Total liabilities 84,000
Owners’ Equity
= Capital Stock 50,000
= Retained Earnings 6,000
Total 140,000. = Total 140,000

Q.3 How do the statement of owner’s equity is calculated?

Ans:
The statement of owner's equity portrays changes in the capital balance of a
business over a reporting period. The concept is usually applied to a sole
proprietorship, where income earned during the period is added to the beginning
capital balance and owner draws are subtracted. The result is the ending balance
in the capital account. The amount of owner's equity is increased by income and
owner contributions. The balance is decreased by losses and owner draws. Thus,
the format of the statement of owner's equity may include the following line
items:
Beginning capital balance
+ Income earned during the period
- Losses incurred during the period
+ Owner contributions during the period

- Owner draws during the period

= Ending capital balance
For example, a business has $100,000 of capital at the beginning of a reporting
period. The entity earns $15,000 of income, and the owner withdraws $5,000
from the capital account. The resulting statement of owner's equity reveals the
following information:

$100,000 Beginning capital balance

+15,000 Incomes
- 5,000 Draw
= $110,000 ending capital balance

Q.4 The ABC INC, has $5000 capital at the opening period. The owner, Chen has
added $1000 cash to paid in capital and earned from the sales $2000. The business
owner has also withdrawn the $2000 for the payment of the personal expenses. The
statement of owner’s equity resulting has shown an ending balance of capital
$6000. Ending balance of equity will be carry forward to the following period and
will become the opening balance.

Requirement:

Prepare the statement of owner’s equity.

Ans:-

Capital at start 5,000

Add: Owner Cash 1,000

Add: earned from sales 2,000

Less: Owner withdraw (2,000)

Capital at end 6,000