Presented below are selected ledger accounts of Vaughn Corporation as of Decembe

Question

Presented below are selected ledger accounts of Vaughn Corporation as of December 31, 2017.

Compute net income for 2017 and prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 19,480 shares of common stock were outstanding during 2017.

Cash $68,000 Administrative expenses 106,700 Selling expenses 83,090 Net sales 544,700 Cost of goods sold 265,900 Cash dividends declared (2017) 22,650 Cash dividends paid (2017) 22,000 Discontinued operations (loss before income taxes) 41,200 Depreciation expense, not recorded in 2016 36,000 Retained earnings, December 31, 2016 96,390 Effective tax rate 30%

Explanation / Answer

Answer 1. Net Sales    544,700.00 Cost of Goods Sold    265,900.00 Gross Margin    278,800.00 Administrative Expense    106,700.00 Selling Expense      83,090.00 Discontinued operations loss      41,200.00    230,990.00 Income before tax      47,810.00 Income Tax - 30% X $47,810      14,343.00 Net Income      33,467.00 Answer 2. Income before Income tax      89,010.00 Income Tax - 30% X $89,010    (26,703.00) Income for Continuing Operations      62,307.00 Discontinued operations loss    (41,200.00) Applicable Income Tax - $41,200 x 30%      12,360.00    (28,840.00) Net Income      33,467.00 Earning per Share Income from Continuing Operations- $62,307 / 19,480 Shares                 3.20 Income from Discontinued Operations- $(28,840) / 19,480 Shares              (1.48) Net Income                 1.72

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