At December 31, 2009, the general ledger of Main Street Marketing had the follow

Question

At December 31, 2009, the general ledger of Main Street Marketing had the following account balances. All adjusting entries (except for income taxes at 40%) have been made. The company had 9,000 shares of common stock outstanding during the year.

Accounts payable $7,340
Accounts receivable $12,980
Accrued liabilities $22,500
Accumulated depreciation $14,980
Advertising expense $8,777
Cash $7,980
Common stock $28,000
Cost of goods sold $118,922
Depreciation expense $11,254
Equipment $78,700
Loss of sale of land $7,900
Interest expense $1,980
Merchandise $22,990
Land $50,000
Retained earnings $37,091
Sales revenue $311,200
Utilities expense $6,350
Wages expense $71,245

a. What is the amount of gross profit? (show computations)
b. What is the amount of operating income? (Show computations)
c. What is the amount of pretax income? (show computations)
d. What is the amount of net income? (show computations)
e. What are the earnings per share? (show computations)

Explanation / Answer

Amount in $ Sales 311200 Cost of goods sold 118922 Gross profit 192278 Less:Advertising 8777 Depreciaiton 11254 Utilities 6350 Wages 71245 Operating income 94652 Less: Interest 1980 Loss on sale of land 7900 Pre tax income 84772 Tax @ 40% 33909 Net income (a) 50863 Common stock (b) 9000 Earnings per share (a/b) 5.65

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