Reference no: EM133114675

Question - Part 1 - If Aubie Co. had income from Continuing Operations of $600,000, Discontinued Operations of $42,000, and Unrealized Gain from Debt Securities of $1,000. Assuming a 40% tax rate. Average common shares outstanding during the year were 200,000 shares. Aubie declared the following dividends during the year: common stock $10,000 and preferred stock $40,000.

Use this information to do (Q1) to (Q5).

(Q1) How much is Aubie Co. Net income for the year?

(Q2) How much is Aubie Co. Comprehensive Income for the year?

(Q3) What is Aubie Co.'s Earnings Per Share for Income from Continuing Operations?

(Q4) What is Aubie Co.'s Earnings Per Share for Discontinued Operations?

(Q5) What is Aubie Co.'s Earnings Per Share for Net Income?

Q6. On November 30, Aubie Co. decided to dispose of a component. During the year, this component generated operating income of $100,000. The book value of the component on November 30 was $850,000 and the fair value less cost to sell of the component was estimated to be $760,000. Aubie Co. sold the discontinued component before the end of the year for $780,000. Aubie has a 40% tax rate.

How much will Aubie report in the Income Statement for Discontinued Operations?

Q7. Which type of accounting change/s should always be accounted for in current and future periods?

A. Changes in Accounting Principle

B. Change in Estimates

C. Correction of an Error

D. Prior Period Adjustments

Q8. Shore Company has a $600,000 balance in Retained Earnings before the following items:

a. Shore Co. discovered that it failed to record depreciation in a prior year in the amount of $50,000

b. Net income for the year was $180,000

c. Preferred Stock Dividend declared was $17,500

d. Common stock Dividend declared wad $140,000

Assuming that Shore Co.'s tax rate is 30% compute the Retained Earnings Balance after considering the impact of the above items.

Part 2 - If Aubie Co. had Income from Continuing Operations of $800,000, Discontinued Operations of $(39,000) (before tax), and Unrealized Gain from Debt Securities of $1,000. Assuming a 30% tax rate. Average common shares outstanding during the year were 100,000 shares. Aubie declared the following dividends during the year: common stock $10,000 and preferred stock $20,000.

(Q1) How much is Aubie Co. Net Income for the year?

(Q2) How much is Aubie Co. Comprehensive Income for the year?

(Q3) What is Aubie Co.'s Earnings Per Share for Income from Continuing Operations?

(Q4) What is Aubie Co.'s Earnings Per Share for Discontinued Operations?

(Q5) What is Aubie Co.'s Earnings Per Share for Net Income?