lesson 13-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 13-1LESSON 13-1

Work Sheet for a Corporation

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

2

LESSON 13-1

ORGANIZATION EXPENSE ORGANIZATION EXPENSE ADJUSTMENTADJUSTMENT

1. Increase the expense.

2. Decrease the asset.

1122

page 371

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

3

LESSON 13-1

FEDERAL INCOME TAX FEDERAL INCOME TAX EXPENSE ADJUSTMENTEXPENSE ADJUSTMENT

1. Increase the expense.

2. Increase the liability.

1122

page 371

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

4

LESSON 13-1

CALCULATING FEDERAL CALCULATING FEDERAL INCOME TAX EXPENSEINCOME TAX EXPENSE page 372

Calculating Net Income before Federal Income Tax

Income Statement Credit Column Total

Income Statement Debit Column Total

before Federal Income Tax

=Net Income before

Federal Income Tax–

$883,782.75 $752,647.48 = $131,135.27–

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

5

LESSON 13-1

CALCULATING FEDERAL CALCULATING FEDERAL INCOME TAX EXPENSEINCOME TAX EXPENSE page 372

Calculating Federal Income Tax Amount

Net Income before Taxes

Tax Rate =Federal Income

Tax Amount

$ 50,000.00 15% = $ 7,500.00Plus 25,000.00 25% = 6,250.00Plus 25,000.00 34% = 8,500.00Plus 31,135.27 39% = 12,142.76

$131,135.27 $ 34,392.76

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

6

LESSON 13-1

CALCULATING FEDERAL CALCULATING FEDERAL INCOME TAX EXPENSEINCOME TAX EXPENSE page 372

Calculating Accrued Federal Income Tax Expense

Total Federal Income Tax

Expense

Estimated Federal Income Tax Already Paid

=Accrued Federal

Income Tax Expense

–

$34,392.76 $32,000.00 = $2,392.76–

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

7

LESSON 13-1

CORPORATE WORK SHEETCORPORATE WORK SHEET page 374

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

8

LESSON 13-1

CORPORATE WORK SHEETCORPORATE WORK SHEET page 375

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

9

LESSON 13-1

TERM REVIEWTERM REVIEW

amortization

page 376

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 13-2LESSON 13-2

Financial Statements and Analysis

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

11

LESSON 13-2

INCOME STATEMENT INCOME STATEMENT FOR A CORPORATIONFOR A CORPORATION page 377

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

12

LESSON 13-2

INCOME STATEMENT INCOME STATEMENT FOR A CORPORATIONFOR A CORPORATION page 377

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

13

LESSON 13-2

ACCEPTABLE AND ACTUAL ACCEPTABLE AND ACTUAL COMPONENT PERCENTAGESCOMPONENT PERCENTAGES page 378

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

14

LESSON 13-2

SHARE OF NET INCOME SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCKASSIGNED TO PREFERRED STOCK page 378

Calculating Share of Net Income for Preferred Stock

Total Par Value Dividend Rate =Preferred Stock’s

Share of Net Income

$170,000.00 8% = $13,600.00

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

15

LESSON 13-2

Total Net IncomePreferred Stock’s

Share of Net Income

=Common Stock’s

Share of Net Income

SHARE OF NET INCOME SHARE OF NET INCOME ASSIGNED TO COMMON STOCKASSIGNED TO COMMON STOCK page 378

Calculating Share of Net Income for Preferred Stock

$96,742.51 $13,600.00 = $83,142.51

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

16

LESSON 13-2

EARNINGS PER SHAREEARNINGS PER SHARE page 379

Calculating Earnings per Share

Share of Net Income

Shares of Stock Outstanding

= Earnings per Share÷

$83,142.51 31,950 = $2.60÷

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

17

LESSON 13-2

STATEMENT OF STOCKHOLDERS’ STATEMENT OF STOCKHOLDERS’ EQUITY FOR A CORPORATIONEQUITY FOR A CORPORATION page 379

2.2. Retained earnings section2.2. Retained earnings section

1.1. Paid-in capital section1.1. Paid-in capital section

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

18

LESSON 13-2

Total Stockholders’

Equity

Shares of Capital Stock Outstanding

= Equity per Share

÷

ANALYZING A STATEMENT OF ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY page 380

Calculating Equity per Share

$170,000.00 1,700 = $100.00÷Preferred

448,655.86 31,950 = 14.04÷Common

$618,655.86Total

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

19

LESSON 13-2

Calculating Price-Earnings Ratio

Market Priceper Share

Earnings per Share

=Price-Earnings

Ratio÷

$19.50 $2.60 = 7.5 times÷

ANALYZING A STATEMENT OF ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY page 380

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

20

LESSON 13-2

BALANCE SHEET FOR A BALANCE SHEET FOR A CORPORATIONCORPORATION page 381

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

21

LESSON 13-2

BALANCE SHEET FOR A BALANCE SHEET FOR A CORPORATIONCORPORATION page 381

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

22

LESSON 13-2

Beginning Book Value

=Allowance for Uncollectible Accounts Beginning Balance

–Accounts Receivable Beginning Balance

ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO

Calculating the average book value of accounts receivable

page 382

$124,579.31=2÷$128,536.91)+($120,621.71

$128,536.91=$6,697.63–$135,234.54

Ending Book Value=Allowance for Uncollectible

Accounts Ending Balance–

Accounts Receivable Ending Balance

$120,621.71=$4,362.18–$124,983.89

Average Book Value of Accounts Receivable

=2÷Ending Book Value

of Accounts Receivable

+Beginning Book

Value of Accounts Receivable

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

23

LESSON 13-2

ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO

Calculating the accounts receivable turnover ratio

page 382

Net Sales on Account

Average Book Value of Accounts

Receivable=

Accounts Receivable

Turnover Ratio÷

$861,356.72 $124,579.31 = 6.9 times÷

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

24

LESSON 13-2

ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE TURNOVER RATIOTURNOVER RATIO

Calculating the average number of days for payment

page 382

Days in YearAccounts

Receivable Turnover Ratio

=Average Number of Days for Payment÷

365 6.9 = 53÷

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

25

LESSON 13-2

Average Stockholders’ Equity

=2÷December 31

Stockholders’ Equity+

January 1 Stockholders’ Equity

$498,622.11=2÷$618,655.86)+($378,588.35

19.4%=$498,622.11÷$96,742.51

Rate Earnedon Average

Stockholders’ Equity=

AverageStockholders’

Equity÷

Net Incomeafter FederalIncome Tax

RATE EARNED ON AVERAGE RATE EARNED ON AVERAGE STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY

Calculate average stockholders’ equity

page 383

Calculate the rate earned

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

26

LESSON 13-2

AverageTotal Assets

=2÷December 31Total Assets

+January 1

Total Assets

$838,573.69=2÷$952,171.03)+($724,976.34

11.5%=$838,573.69÷$96,742.51

Rate Earned onAverage Total Assets

=Average

Total Assets÷

Net Incomeafter FederalIncome Tax

RATE EARNED ON RATE EARNED ON AVERAGE TOTAL ASSETSAVERAGE TOTAL ASSETS

Calculate average total assets

page 383

Calculate the rate earned

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

27

LESSON 13-2

TERMS REVIEWTERMS REVIEW

earnings per share equity per share market value price-earnings ratio rate earned on average stockholders’ equity rate earned on average total assets

page 365

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 13-3LESSON 13-3

Other End-of-Fiscal-Period Work

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

29

LESSON 13-3

ADJUSTING ENTRIESADJUSTING ENTRIES page 386

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

30

LESSON 13-3

ADJUSTING ENTRIESADJUSTING ENTRIES page 386

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

31

LESSON 13-3

CLOSING ENTRIESCLOSING ENTRIES

Need art form page 397.

page 387

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

32

LESSON 13-3

POST-CLOSING TRIAL BALANCEPOST-CLOSING TRIAL BALANCE page 388

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

33

LESSON 13-3

POST-CLOSING TRIAL BALANCEPOST-CLOSING TRIAL BALANCE page 388

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

34

LESSON 13-3

REVERSING ENTRIESREVERSING ENTRIES page 389

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

35

LESSON 13-3

FEDERAL INCOME TAX RETURNFEDERAL INCOME TAX RETURN page 390

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

36

LESSON 13-3

FEDERAL INCOME TAX RETURNFEDERAL INCOME TAX RETURN page 390