Chapter 4, Problem 4.10ME

Reporting an Income Statement with Earnings per Share

Romney’s Marketing Company has the following adjusted trial balance at the end of the current year. No dividends were declared. However, 500 shares ($0.10 par value per share) issued at the end of the year for $3,000 are included below:

	Debit	Credit
Cash	1,500
Accounts receivable	2,200
Interest receivable	100
Prepaid insurance	1,600
Long-term notes receivable	2,800
Equipment	15,290
Accumulated depreciation		3,000
Accounts payable		2,400
Accrued expenses payable		3,920
Income taxes payable		2,700
Unearned rent revenue		500
Common stock (800 shares)		80
Additional paid-in capital		3,620
Retained earnings		2,000
Sales revenue		38,500
Interest revenue		100
Rent revenue		800
Wages expense	19,500
Depreciation expense	1,800
Utilities expense	380
Insurance expense	750
Rent expense	9,000
Income tax expense	2,700
Total	57,620	57,620

Prepare a multistep income statement in good form for the current year. Include earnings per share (rounded to two decimal places).

Reporting a Balance Sheet and Explaining the Effects of Adjustments on the Statement of Cash Flows

1. 1. Refer to M4-8. Prepare a classified balance sheet in good form for the end of the current year.
2. 2. Explain how the adjustments in M4-4 and M4-6 affected the operating, investing, and financing activities on the statement of cash flows.