LESSON 15-1 Preparing an Income Statement 5/17/2019 LESSON 15-1 Preparing an Income Statement

INCOME STATEMENT INFORMATION ON A WORK SHEET page 448 LESSON 15-1

REVENUE SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS page 449 1 2 3 4 5 8 9 6 7 1. Heading 6. Contra account amounts 2. Revenue section 7. Contra account total 3. Title of revenue account 8. Net Sales 4. Sales amount 9. Net sales amount 5. Less contra accounts LESSON 15-1

COST OF MERCHANDISE SOLD SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS page 450 1. Cost of Merchandise Sold section 2. Beginning inventory 1 3. Purchases section 2 4. Total cost of merchandise available for sale 3 4 5. Ending inventory 5 6 6. Cost of merchandise sold LESSON 15-1

COMPLETING AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS page 452 1. Gross Profit on Sales 2. Expenses section 7 1 3. Net Income before Federal Income Tax 4. Less Federal Income Tax Expense 2 5. Net Income after Federal Income Tax 6. Double lines 3 7. Component percentage 4 6 5 LESSON 15-1

TERMS REVIEW net sales cost of merchandise sold gross profit on sales page 454 net sales cost of merchandise sold gross profit on sales LESSON 15-1

LESSON 15-2 Analyzing an Income Statement 5/17/2019 LESSON 15-2 Analyzing an Income Statement

ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457 LESSON 15-2

FINANCIAL RATIOS Earnings per Share Earnings per Share = page 459 Earnings per Share Earnings per Share = Number of Shares Outstanding ÷ Net Income after Federal Income Tax $80,313.95 ÷ 2,500 = $32.13 Price-Earnings Ratio Price-Earnings Ratio = Earnings per Share ÷ Market Price per Share $345.00 ÷ $32.13 = 10.7 LESSON 15-2

TERMS REVIEW financial ratio earnings per share price-earning ratio page 460 financial ratio earnings per share price-earning ratio LESSON 15-2

LESSON 15-3 Preparing a Statement of Stockholder’s Equity 5/17/2019 LESSON 15-3 Preparing a Statement of Stockholder’s Equity

CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page 461 1 2 3 4 5 1. Heading 2. Capital Stock and Par Value 3. Stock at the beginning of the year 4. Stock issued during the year 5. Total stock issued at the end of the year LESSON 15-3

RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY page 462 1 3 5 2 4 6 7 1. Retained Earnings 4. Dividends declared 2. Beginning balance 5. Increase in retained earnings 3. Net income after federal income tax 6. Ending balance 7. Total stockholders’ equity LESSON 15-3

TERMS REVIEW statement of stockholders’ equity par value page 463 LESSON 15-3

LESSON 15-4 Preparing a Balance Sheet 5/17/2019 LESSON 15-4 Preparing a Balance Sheet

BALANCE SHEET INFORMATION ON A WORK SHEET page 464 LESSON 15-4

CURRENT ASSETS SECTION OF A BALANCE SHEET page 465 1 2 3 4 5 1. Heading 3. Book value of accounts receivable 4. Asset accounts 2. Begin assets section 5. Current assets LESSON 15-4

PLANT ASSETS SECTION OF A BALANCE SHEET page 466 1 2 4 3 5 1. 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. LESSON 15-4

LIABILITIES SECTION OF A BALANCE SHEET page 467 1. Heading 2. Account title and amount of each current liability 1 3. Total liabilities 2 3 LESSON 15-4

STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET page 468 1 3 2 4 5 6 1. Stockholders’ Equity 5. Total liabilities and stockholders’ equity 2. Capital stock 6. Double rules 3. Retained earnings 4. Total stockholders’ equity LESSON 15-4

COMPLETED BALANCE SHEET page 469 (continued on next slide) LESSON 15-4

COMPLETED BALANCE SHEET page 469 (continued from previous slide) LESSON 15-4

TERMS REVIEW current liabilities long-term liabilities page 471 current liabilities long-term liabilities supporting schedule LESSON 15-4