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					   Montclair State University


Accounting 301

  Homework
   Problem
     3-5
          Kubek Corporation
          Income Statement
For the Year Ended December 31, 20x4
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
 Selling Expense                        85,000
 General & Administrative Expense      100,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
 Selling Expense                        85,000
 General & Administrative Expense      100,000
 Uncollectible Accounts Expense
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
 Selling Expense                        85,000
 General & Administrative Expense      100,000
 Uncollectible Accounts Expense         12,000




             16,000 - 4,000 = 12,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
 Selling Expense                        85,000
 General & Administrative Expense      100,000
 Uncollectible Accounts Expense         12,000      197,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
  Selling Expense                       85,000
  General & Administrative Expense     100,000
  Uncollectible Accounts Expense        12,000      197,000
Income From Continuing Operations
  Before Taxes                                      208,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
  Selling Expense                       85,000
  General & Administrative Expense     100,000
  Uncollectible Accounts Expense        12,000      197,000
Income From Continuing Operations
  Before Taxes                                      208,000
Applicable Income Taxes (40%)                        83,200
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
  Selling Expense                       85,000
  General & Administrative Expense     100,000
  Uncollectible Accounts Expense        12,000      197,000
Income From Continuing Operations
  Before Taxes                                      208,000
Applicable Income Taxes (40%)                        83,200
Income From Continuing Operations                   124,800
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Net Sales                                          $635,000
Cost of Goods Sold                                  230,000
Gross Margin                                        405,000
Operating Expenses
  Selling Expense                       85,000
  General & Administrative Expense     100,000
  Uncollectible Accounts Expense        12,000      197,000
Income From Continuing Operations
  Before Taxes                                      208,000
Applicable Income Taxes (40%)                        83,200
Income From Continuing Operations                   124,800
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
                       Kubek Corporation
                       Income Statement
             For the Year Ended December 31, 20x4

Income From Continuing Operations                   124,800
Loss from Operation of Discontinued
  Camera Division
            Discontinued Operations
                                       Disposal
Beginning    Measurement    End of       date
 of year        date       year 20x4    20x5
            Discontinued Operations
                                                 Disposal
Beginning       Measurement          End of        date
 of year           date             year 20x4     20x5


            A




Reporting loss/gain on discontinued operations
• income (loss) from operations
            Discontinued Operations
                                                    Disposal
Beginning       Measurement          End of           date
 of year           date             year 20x4        20x5


            A                    Phase-out Period




Reporting loss/gain on discontinued operations
• income (loss) from operations
• gain (loss) on disposal
            Discontinued Operations
                                                                            Disposal
Beginning       Measurement                         End of                    date
 of year           date                            year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations



Reporting loss/gain on discontinued operations
• income (loss) from operations
• gain (loss) on disposal
   – income (loss) from operations during the phase-out
     period
            Discontinued Operations
                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
Reporting loss/gain on discontinued operations
• income (loss) from operations
• gain (loss) on disposal
   – income (loss) from operations during the phase-out
     period
    – gain (loss)from disposal of segment assets
            Discontinued Operations
                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
Reporting loss/gain on discontinued operations
• income (loss) from operations
• gain (loss) on disposal
   – income (loss) from operations during the phase-out
     period
    – gain (loss)from disposal of segment assets
                       Kubek Corporation
                       Income Statement
             For the Year Ended December 31, 20x4

Income From Continuing Operations                   124,800
Loss from Operation of Discontinued
  Camera Division
                           Kubek Corporation
                           Income Statement
                 For the Year Ended December 31, 20x4

   Income From Continuing Operations                                    124,800
   Loss from Operation of Discontinued
     Camera Division




                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
            Discontinued Operations
                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
                           Kubek Corporation
                           Income Statement
                 For the Year Ended December 31, 20x4

   Income From Continuing Operations                                    124,800
   Loss from Operation of Discontinued
     Camera Division                                       60,000




                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000




             60,000 x 40% = 24,000
                           Kubek Corporation
                           Income Statement
                 For the Year Ended December 31, 20x4

   Income From Continuing Operations                                    124,800
   Loss from Operation of Discontinued
     Camera Division, Less Income Taxes
     of $24,000                                            36,000
   Loss on Disposal of Discontinued
     Camera Division


                                                                               Disposal
Beginning       Measurement                            End of                    date
 of year           date                               year 20x4                 20x5


            A                                   Phase-out Period
                              Realized income (loss)      Estimated income (loss)
                                 from operations              from operations

                               Realized gain (loss)          Estimated gain (loss)
                                   on disposal                    on disposal
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division




         6,040,000 - 6,050,000 = (10,000)
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division




         6,040,000 - 6,050,000 = (10,000)
    (10,000) + (40,000) + (30,000) = (80,000)
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division                        80,000




         6,040,000 - 6,050,000 = (10,000)
    (10,000) + (40,000) + (30,000) = (80,000)
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $ ? for Operating
  Losses During Phase-Out Period,
                         Kubek Corporation
                         Income Statement
               For the Year Ended December 31, 20x4

    Income From Continuing Operations                           124,800
    Loss from Operation of Discontinued
      Camera Division, Less Income Taxes
      of $24,000                              36,000
    Loss on Disposal of Discontinued
      Camera Division, Including
      Provision of $ ? for Operating
      Losses During Phase-Out Period          80,000                   Disposal
Beginning       Measurement               End of                         date
 of year            date                 year 20x4                      20x5


           A                              Phase-out Period
                        Realized income (loss)      Estimated income (loss)
                           from operations              from operations

                          Realized gain (loss)       Estimated gain (loss)
                              on disposal                 on disposal
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period         80,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000           48,000     84,000




             80,000 x 40% = 32,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000           48,000     84,000
                      Kubek Corporation
                      Income Statement
            For the Year Ended December 31, 20x4

Income From Continuing Operations                  124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                             36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000           48,000     84,000
Income Before Extraordinary Item                    40,800
                       Kubek Corporation
                       Income Statement
             For the Year Ended December 31, 20x4

Income From Continuing Operations                   124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                              36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000            48,000     84,000
Income Before Extraordinary Item                     40,800
Extraordinary Loss Due to Earthquake,
  Net of Tax Effect of $16,000                       24,000


              40,000 x 40% = 16,000
                       Kubek Corporation
                       Income Statement
             For the Year Ended December 31, 20x4

Income From Continuing Operations                    124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                              36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000            48,000      84,000
Income Before Extraordinary Item                      40,800
Extraordinary Loss Due to Earthquake,
  Net of Tax Effect of $16,000                        24,000
Net Income                                          $ 16,800
                       Kubek Corporation
                       Income Statement
             For the Year Ended December 31, 20x4

Income From Continuing Operations                    124,800
Loss from Operation of Discontinued
  Camera Division, Less Income Taxes
  of $24,000                              36,000
Loss on Disposal of Discontinued
  Camera Division, Including
  Provision of $70,000 for Operating
  Losses During Phase-Out Period,
  Net of Tax Effect of $32,000            48,000      84,000
Income Before Extraordinary Item                      40,800
Extraordinary Loss Due to Earthquake,
  Net of Tax Effect of $16,000                        24,000
Net Income                                          $ 16,800
                      Kubek Corporation
                 Retained Earnings Statements
            For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3               $580,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense          12,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800




               $12,000 x 40% = $4,800
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
Retained Earnings, December 31, 20x3 (as adjusted)    587,200
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
Retained Earnings, December 31, 20x3 (as adjusted)    587,200
Add:       Net Income                                  16,800
                                                      604,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
Retained Earnings, December 31, 20x3 (as adjusted)    587,200
Add:       Net Income                                  16,800
                                                      604,000

Deduct:    Dividends Declared                          35,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
Retained Earnings, December 31, 20x3 (as adjusted)    587,200
Add:       Net Income                                  16,800
                                                      604,000

Deduct:    Dividends Declared                          35,000
Retained Earnings, December 31, 20x4                 $569,000
                       Kubek Corporation
                  Retained Earnings Statements
             For the Year Ended December 31, 20x4

Retained Earnings, December 31, 20x3 (as reported)   $580,000
Add:       Correction of Prior Year Error -
           Overstatement of Insurance Expense,
           Net of Tax Effect of $4,800                  7,200
Retained Earnings, December 31, 20x3 (as adjusted)    587,200
Add:       Net Income                                  16,800
                                                      604,000

Deduct:    Dividends Declared                          35,000
Retained Earnings, December 31, 20x4                 $569,000
Homework Problem 3-5




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