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Category > Accounting Posted 23 May 2017 My Price 5.00

Identification of Income Statement Deficiencies

(Identification of Income Statement Deficiencies) O’Malley Corporation was incorporated and began business on January 1, 2012. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2012. The accountant for O’Malley Corporation provides you with the following income statement which O’Malley plans to submit to the bank.

O’MALLEY   CORPORATION
  INCOME STATEMENT

    

Sales   revenue

  

$850,000

Dividends

  

32,300

Gain on   recovery of insurance proceeds from earthquake loss (extraordinary)

  

38,500
   

920,800

Less:

    

Selling   expenses

$101,100

  

Cost of   goods sold

510,000

  

Advertising   expense

13,700

  

Loss on   obsolescence of inventories

34,000

  

Loss on   discontinued operations

48,600

  

Administrative   expense

73,400

780,800

Income   before income tax

  

140,000

Income   tax

  

56,000

Net   income

  

$84,000

Instructions

Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step income statement.

 
 

 

Answers

Alpha Geek
(8)
Status NEW Posted 23 May 2017 12:05 PM My Price 5.00

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file 1495544513-Answer.docx preview (71 words )
O-----------'MA-----------LLE-----------Y C-----------ORP-----------ORA-----------TIO-----------N ----------- In-----------com-----------e S-----------tat-----------eme-----------nt -----------For----------- th-----------e y-----------ear----------- en-----------ded----------- 20-----------12 -----------Rev-----------enu-----------es -----------Sal-----------es -----------Rev-----------enu-----------e $-----------850-----------,00-----------0.0-----------0 D-----------ivi-----------den-----------ds -----------$32-----------,30-----------0.0-----------0 G-----------ain----------- on----------- re-----------cov-----------ery----------- of----------- in-----------sur-----------anc-----------e p-----------roc-----------eed-----------s f-----------rom----------- ea-----------rth-----------qua-----------ke -----------los-----------s (-----------Ext-----------rao-----------rdi-----------nar-----------y) -----------$38-----------,50-----------0.0-----------0 _-----------___-----------___-----------___-----------__ -----------$ 9-----------20,-----------800-----------.00----------- Ex-----------pen-----------ses----------- Co-----------st -----------Of -----------Goo-----------ds -----------Sol-----------d $-----------510-----------,00-----------0.0-----------0 S-----------ell-----------ing----------- Ex-----------pen-----------ses----------- $1-----------01,-----------100-----------.00----------- Ad-----------ver-----------tis-----------ing----------- Ex-----------pen-----------ses----------- $1-----------3,7-----------00.-----------00 -----------Adm-----------ini-----------str-----------ati-----------ve -----------Exp-----------ens-----------e $-----------73,-----------400-----------.00----------- Lo-----------ss -----------on -----------Obs-----------ole-----------sce-----------nce----------- of----------- in-----------ven-----------tor-----------ies----------- $3-----------4,0-----------00.-----------00 -----------___-----------___-----------___-----------___-----------_
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