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

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

3. 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

4. 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

5. 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

6. 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

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

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

9. 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

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

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

12. 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

13. 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

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

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

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

17. 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

18. 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

19. 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

20. 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

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

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

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