CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 13-2 Financial Statements and Analysis
CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 13-2 INCOME STATEMENT FOR A CORPORATION page 377
CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 13-2 INCOME STATEMENT FOR A CORPORATION page 377
CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 13-2 ACCEPTABLE AND ACTUAL COMPONENT PERCENTAGES page 378
CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 13-2 SHARE OF NET INCOME ASSIGNED TO PREFERRED STOCK page 378 Calculating Share of Net Income for Preferred Stock Total Par ValueDividend Rate= Preferred Stock’s Share of Net Income $170, %=$13,
CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 13-2 Total Net Income Preferred Stock’s Share of Net Income = Common Stock’s Share of Net Income SHARE OF NET INCOME ASSIGNED TO COMMON STOCK page 378 Calculating Share of Net Income for Preferred Stock $96,742.51$13,600.00=$83,
CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 13-2 EARNINGS PER SHARE page 379 Calculating Earnings per Share Share of Net Income Shares of Stock Outstanding =Earnings per Share ÷ $83, ,950=$2.60 ÷
CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 13-2 STATEMENT OF STOCKHOLDERS’ EQUITY FOR A CORPORATION page Retained earnings section 1. 1.Paid-in capital section
CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 13-2 Total Stockholders’ Equity Shares of Capital Stock Outstanding = Equity per Share ÷ ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380 Calculating Equity per Share $170, ,700=$ ÷ Preferred 448, ,950=14.04 ÷ Common $618,655.86Total
CENTURY 21 ACCOUNTING © Thomson/South-Western 10 LESSON 13-2 Calculating Price-Earnings Ratio Market Price per Share Earnings per Share = Price-Earnings Ratio ÷ $19.50$2.60=7.5 times ÷ ANALYZING A STATEMENT OF STOCKHOLDERS’ EQUITY page 380
CENTURY 21 ACCOUNTING © Thomson/South-Western 11 LESSON 13-2 BALANCE SHEET FOR A CORPORATION page 381
CENTURY 21 ACCOUNTING © Thomson/South-Western 12 LESSON 13-2 BALANCE SHEET FOR A CORPORATION page 381
CENTURY 21 ACCOUNTING © Thomson/South-Western 13 LESSON 13-2 Beginning Book Value = Allowance for Uncollectible Accounts Beginning Balance – Accounts Receivable Beginning Balance ACCOUNTS RECEIVABLE TURNOVER RATIO Calculating the average book value of accounts receivable page 382 $124,579.31=2÷$128,536.91)+($120, $128,536.91=$6,697.63–$135, Ending Book Value= Allowance for Uncollectible Accounts Ending Balance – Accounts Receivable Ending Balance $120,621.71=$4,362.18–$124, Average Book Value of Accounts Receivable =2÷ Ending Book Value of Accounts Receivable + Beginning Book Value of Accounts Receivable
CENTURY 21 ACCOUNTING © Thomson/South-Western 14 LESSON 13-2 ACCOUNTS RECEIVABLE TURNOVER RATIO Calculating the accounts receivable turnover ratio page 382 Net Sales on Account Average Book Value of Accounts Receivable = Accounts Receivable Turnover Ratio ÷ $861,356.72$124,579.31=6.9 times ÷
CENTURY 21 ACCOUNTING © Thomson/South-Western 15 LESSON 13-2 ACCOUNTS RECEIVABLE TURNOVER RATIO Calculating the average number of days for payment page 382 Days in Year Accounts Receivable Turnover Ratio = Average Number of Days for Payment ÷ =53 ÷
CENTURY 21 ACCOUNTING © Thomson/South-Western 16 LESSON 13-2 Average Stockholders’ Equity =2÷ December 31 Stockholders’ Equity + January 1 Stockholders’ Equity $498,622.11=2÷$618,655.86)+($378, %=$498,622.11÷$96, Rate Earned on Average Stockholders’ Equity = Average Stockholders’ Equity ÷ Net Income after Federal Income Tax RATE EARNED ON AVERAGE STOCKHOLDERS’ EQUITY Calculate average stockholders’ equity page 383 Calculate the rate earned
CENTURY 21 ACCOUNTING © Thomson/South-Western 17 LESSON 13-2 Average Total Assets =2÷ December 31 Total Assets + January 1 Total Assets $838,573.69=2÷$952,171.03)+($724, %=$838,573.69÷$96, Rate Earned on Average Total Assets = Average Total Assets ÷ Net Income after Federal Income Tax RATE EARNED ON AVERAGE TOTAL ASSETS Calculate average total assets page 383 Calculate the rate earned
CENTURY 21 ACCOUNTING © Thomson/South-Western 18 LESSON 13-2 TERMS REVIEW earnings per share equity per share market value price-earnings ratio rate earned on average stockholders’ equity rate earned on average total assets page 365