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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 15-1 INCOME STATEMENT INFORMATION ON A WORK SHEET page 448

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON Contra account amounts REVENUE SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS Heading 7.Contra account total 3.Title of revenue account 8.Net Sales 4.Sales amount9.Net sales amount 5.Less contra accounts 2.Revenue section page 449

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 15-1 COST OF MERCHANDISE SOLD SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS page Cost of Merchandise Sold section 2.Beginning inventory 3.Purchases section 4.Total cost of merchandise available for sale 5.Ending inventory 6.Cost of merchandise sold

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 15-1 COMPLETING AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS page Component percentage 6.Double lines 5.Net Income after Federal Income Tax 4.Less Federal Income Tax Expense 3.Net Income before Federal Income Tax 2.Expenses section 1.Gross Profit on Sales

6 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 15-1 TERMS REVIEW net sales cost of merchandise sold gross profit on sales page 454

7 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-2 Analyzing an Income Statement

8 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 15-2 ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457

9 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 15-2 Price-Earnings Ratio = Earnings per Share ÷ Market Price per Share Earnings per Share = Number of Shares Outstanding ÷ Net Income after Federal Income Tax FINANCIAL RATIOS page 459 Earnings per Share Price-Earnings Ratio $32.13=2,500÷$80, =$32.13÷$345.00

10 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 15-2 TERMS REVIEW financial ratio earnings per share price-earning ratio page 460

11 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-3 Preparing a Statement of Stockholders’ Equity

12 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 15-3 CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page Heading 2. Capital Stock and Par Value 5.Total stock issued at the end of the year 3.Stock at the beginning of the year 4.Stock issued during the year

13 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 15-3 RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page Dividends declared Beginning balance 7.Total stockholders’ equity 6.Ending balance3.Net income after federal income tax 5.Increase in retained earnings 1.Retained Earnings

14 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 15-3 TERMS REVIEW statement of stockholders’ equity par value page 463

15 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-4 Preparing a Balance Sheet

16 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 15-4 BALANCE SHEET INFORMATION ON A WORK SHEET page 464

17 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 15-4 CURRENT ASSETS SECTION OF A BALANCE SHEET page Book value of accounts receivable 4. Remaining current asset accounts1. Heading 2. Begin assets section 5. Current assets

18 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 15-4 PLANT ASSETS SECTION OF A BALANCE SHEET page Write the heading Plant Assets. 2.Calculate the book value of office equipment. 3.Use the same procedure to calculate the book value of store equipment. 4.Calculate total plant assets. 5.Calculate total assets.

19 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 15-4 LIABILITIES SECTION OF A BALANCE SHEET 1 3 page Heading 2.Account title and amount of each current liability 3.Total liabilities 2

20 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 15-4 STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET 1 page Total liabilities and stockholders’ equity Capital stock 1.Stockholders’ Equity 3.Retained earnings 4.Total stockholders’ equity 6.Double rules 6

21 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued on next slide)

22 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued from previous slide)

23 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 15-4 TERMS REVIEW current liabilities long-term liabilities supporting schedule page 471


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