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Comprehensive: Income Statement and Supporting Schedules The following is a partial list of the account balances, after adjustments, of Silvoso Company on December 31, 2013:

Depreciation Expense: Buildings and Offïce Equipment $ 14,500

Sales Commissions and Salaries ..............................................18,200

Inventory, January 1, 2013 .............................................................37,800

Sales Supplies Used....................................................................... 5,600

Retained Earnings, January 1, 2013 ..........................................83,700

Purchases Returns and Allowances........................................... 6,200

Bad Debts Expense........................................................................ 2,700

Transportation-in ...........................................................................13,500

Sales Discounts Taken .................................................................4,900

Purchases 173,000 Delivery Expense .......................................7,700

Office Supplies Expense ........................................................1,400

Common Stock, $10 par ............................................................80,000

Loss on Sale of Office Equipment (pretax) .........................5,000

Insurance and Property Tax Expense....................................... 8,500

Sales ..........................................................................................340,700

Rent Revenue ...............................................................................6,900

Office and Administrative Salaries Expense................... 32,000

Promotion and Advertising Expense .....................................17,000

Sales Returns and Allowances ..............................................12,100

Purchases Discounts Taken................................................... 4,100

Depreciation Expense: Sales Equipment............................. 9,600

Interest Expense........................................................................ 3,700

The following information is also available:

1. The company declared and paid a $0.60 per share cash dividend on its common stock. The stock was outstand-ing the entire year.

2. A physical count determined that the December 31, 2013, ending inventory is $34,100.

3. A tornado destroyed a warehouse, resulting in a pretax loss of $12,000. The last tornado in this area had occurred 20 years earlier.

4. On May 1, 2013, the company sold an unprofitable division (R). From January through April, Division R (a component of the company) had incurred a pretax operating loss of $8,700. Division R was sold at a pretax gain of $10,000.

5. The company is subject to a 30% income tax rate. Its income tax expense for 2013 totals $4,230.

The break-down is as follows: Income

Tax Expense (Credit) Related to Amount Continuing income $ 7,440

Operating loss of Division R (2,610)

Gain on sale of Division R 3,000

Loss from tornado (3,600) $ 4,230

6. The company had average shareholders' equity of $150,000 during 2013.

Required:

1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, sell-ing expenses, general and administrative expenses, and depreciation expense.

2. Prepare a 2013 multiple-step income statement for Silvoso. Include any related note to the financial statements.

3. Prepare a 2013 retained earnings statement.

4. Next Level What was Silvosos return on shareholders' equity for 2013? What is your evaluation of Silvosos return on shareholders' equity if last year it was 10%

 

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