1. (TCO 5) Misty Company reported the following before-tax items during the current year:
operating expenses $250
restructuring charges $20
extraordinary loss $50
Misty’s effective tax rate is 40% and there were 1,000 shares of common stock outstanding.
What would be Misty’s income before extraordinary item(s)? (Points : 15)
2. (TCO 4) Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Debit Credit Account receivable-trade $680 Building and equipment 920 Cash-checking 34 Installment receivables 50 Interest receivable 30 Inventory 16 Land 150 Notes receivable long-term 450 Pretty cash funds 5 Prepaid expenses (for coming year) 20 Supplies 8 Trademark 40 Accounts payable trade 560 Accumulated depreciation 80 Additional paid-in capital, common 485 Allowance for uncollectible accounts 20 Cash dividends payable 30 Common stock, at par 15 Income tax payable 65 Notes payable (long term) 800 Retained earnings 48 Unearned revenues 40 Cash dividends declared-common 120 Income summary 380 ——————– Totals 2523 2523 ==================== Symphony uses a perpetual inventory system. What would Symphony report as total assets? Hint: Don’t forget to deduct the contra assets.
What would Symphony report as total shareholders’ equity?