1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-1 Preparing an Income Statement

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 15-1 INCOME STATEMENT INFORMATION ON A WORK SHEET page 448

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 15-1 6.Contra account amounts REVENUE SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS 1 2 34 5 67 89 1.Heading 7.Contra account total 3.Title of revenue account 8.Net Sales 4.Sales amount9.Net sales amount 5.Less contra accounts 2.Revenue section page 449

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 15-1 COST OF MERCHANDISE SOLD SECTION OF AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS 1 2 3 page 450 4 6 5 1.Cost of Merchandise Sold section 2.Beginning inventory 3.Purchases section 4.Total cost of merchandise available for sale 5.Ending inventory 6.Cost of merchandise sold

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 15-1 COMPLETING AN INCOME STATEMENT FOR A MERCHANDISING BUSINESS 1 2 4 5 page 452 7 3 6 7.Component percentage 6.Double lines 5.Net Income after Federal Income Tax 4.Less Federal Income Tax Expense 3.Net Income before Federal Income Tax 2.Expenses section 1.Gross Profit on Sales

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-2 Analyzing an Income Statement

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 15-2 ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 15-2 Price-Earnings Ratio = Earnings per Share ÷ Market Price per Share Earnings per Share = Number of Shares Outstanding ÷ Net Income after Federal Income Tax FINANCIAL RATIOS page 459 Earnings per Share Price-Earnings Ratio $32.13=2,500÷$80,313.95 10.7=$32.13÷$345.00

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-3 Preparing a Statement of Stockholders’ Equity

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 15-3 CAPITAL STOCK SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY 1 2 3 4 5 page 461 1.Heading 2. Capital Stock and Par Value 5.Total stock issued at the end of the year 3.Stock at the beginning of the year 4.Stock issued during the year

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 15-3 RETAINED EARNINGS SECTION OF THE STATEMENT OF STOCKHOLDERS’ EQUITY 1 2 3 4 page 462 4.Dividends declared 6 7 5 2.Beginning balance 7.Total stockholders’ equity 6.Ending balance3.Net income after federal income tax 5.Increase in retained earnings 1.Retained Earnings

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-4 Preparing a Balance Sheet

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 15-4 BALANCE SHEET INFORMATION ON A WORK SHEET page 464

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 15-4 CURRENT ASSETS SECTION OF A BALANCE SHEET 1 2 3 4 5 page 465 3. Book value of accounts receivable 4. Remaining current asset accounts1. Heading 2. Begin assets section 5. Current assets

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 15-4 PLANT ASSETS SECTION OF A BALANCE SHEET 1 2 3 page 466 4 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.

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 15-4 LIABILITIES SECTION OF A BALANCE SHEET 1 3 page 467 1.Heading 2.Account title and amount of each current liability 3.Total liabilities 2

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 15-4 STOCKHOLDERS’ EQUITY SECTION OF A BALANCE SHEET 1 page 468 5.Total liabilities and stockholders’ equity 4 5 23 2.Capital stock 1.Stockholders’ Equity 3.Retained earnings 4.Total stockholders’ equity 6.Double rules 6

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued on next slide)

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 15-4 COMPLETED BALANCE SHEET page 469 (continued from previous slide)