2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Textbook Question

Chapter 5, Problem 5.3P

Multiple-step, Single-step, and Condensed Statements of Net Income. Right Angle Manufacturing Company provided the following information for the year ended December 31 for the current year.

Right Angle Manufacturing Company

Trial Balance (Partial)

For the Year Ended December 31

Account	Debit	Credit
Common Stock—Beginning Balance		$ 75,000
Retained Earnings—Beginning Balance Accumulated Other Comprehensive Income—Beginning Balance	$3,400	95,000
Dividends	500
Sales		230,000
Dividend Income		200
Interest Income		680
Gain on Disposal of Plant Assets		1,000
Unrealized Gain on Trading Securities Cost of Goods Sold	$75,000	$4,000

Right Angle Manufacturing Company

Trial Balance (Partial)

For the Year Ended December 31

Account	Debit	Credit
Selling Expenses	1,450
Advertising Expense	3,400
Office Supplies Expense	1,250
Sales Salaries Expense	145
Office Salaries Expense	1,890
Accounting and Legal Fees—Administrative	575
Systems Consulting Foes—General	670
Depreciation Expense—General	2,350
Amortization Expense—General	3,000
Interest Expense	890
Loss on Asset Impairment	900
Loss on Discontinued Operations -Before Tax	250
Unrealized Loss on Available for Sale Bonds	780

Required

a. Prepare a single-step income statement for the current year The tax rate is 40%.
b. Prepare a multiple-step income statement for the current year.
c. Prepare a condensed multiple-step income statement for the current year and include all supporting schedules.

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Chapter 5, Problem 5.2P

Chapter 5, Problem 5.4P

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Chapter 5 Solutions

Intermediate Accounting (2nd Edition)

Ch. 5 - What are the three limitations of the income...Ch. 5 - In what way is the income statement useful for...Ch. 5 - Prob. 5.3Q Ch. 5 - Prob. 5.4Q Ch. 5 - What management behavior does the term earnings...Ch. 5 - What is the difference between permanent and...Ch. 5 - Prob. 5.7Q Ch. 5 - Prob. 5.8Q Ch. 5 - Prob. 5.9Q Ch. 5 - Prob. 5.10Q

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Solution Summary: The author explains that the net income by using the single step method is 86,466. The multi-step income statement is an alternative option.

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