E5-3.
Information Item
Report
A,F (1) Summarized financial data for 5- or 10-year period.
C (2) Initial announcement of quarterly earnings.
B (3) Announcement of a change in auditors.
D (4) Complete quarterly income statement, balance sheet and cash flow statement.
A,F (5) The four basic financial statements for the year.
E (6) Summarized income statement information for the quarter.
F
(7) Detailed discussion of the company’s competition.
A,F (8) Notes to financial statements.
A,F (9) A description of those responsible for the financial statements.
C (10) Initial announcement of hiring of new vice president for sales.
A. Annual Report
B. Form 8-K
C. Press Release
D. Form 10-Q
E. Quarterly Report
F. Form 10-K
G. None of the above
E5-9.
Terms
E (1) Cost of goods sold
Definitions
A. Sales revenue minus cost of goods sold.
G (2) Interest expense
B (3) Extraordinary item
C (4) Service revenue
F (5) Income tax expense
B. Item that is both unusual and infrequent.
C. Sales of services for cash or on credit.
D. Revenues + Gains - Expenses - Losses including effects of discontinued operations, on operations
I (6) Income before extraordinary items
D (7) Net income
A (8) Gross margin on sales
H (9) EPS
J (10) Operating expenses extraordinary items, and cumulative effects of accounting changes (if any).
E. Amount of resources used to purchase or produce the goods that were sold during the reporting period.
F. Income tax on revenues minus operating expenses.
G. Cost of money (borrowing) over time. operations outstanding.
I. Income before unusual and infrequent items and the related income tax.
J. Total expenses directly related to operations.
K. Income before all income tax and before discontinued operations, extraordinary items, and cumulative effects of accounting changes
(if any).
L. None of the above.
E5-11.
VILLAGE CORPORATION

Income Statement
For the Year Ended December 31, 2007
Computations in Order
Sales revenue ................................. Given
Cost of goods sold .......................... (a) $70,000 - $24,500
Gross profit ..................................... Given
Operating expenses:
Selling expense............................. Given
Administrative expense ................. (c) $12,500 – $8,000
Total operating expenses ................ (b) $24,500
– $12,000
Pretax income ................................. Given
Income tax expense .................... (d) $12,000 x 30%*
Net income ...................................... (e) $12,000
– $3,600
Earnings per share ($8,400

3,000 shares*) $2.80
$8,000
4,500
*Given
P5-6.
(a) THOMAS SALES COMPANY
Income Statement
For the Year Ended March 31, 2008
Sales revenue ...................................................................
Cost of goods sold ......................................................
Gross profit .......................................................................
Operating expenses:
Operating expenses ...................................................
Depreciation expense .................................................
Total operating expenses .......................................
Income from operations ....................................................
Interest expense .........................................................
Income before income taxes ............................................
Income tax expense ($34,000 x 30%) ........................
Net income ........................................................................
Earnings per share ($23,800

30,000 shares) .................
3,600
18,000
5,500
$70,000
45,500
24,500
12,500
12,000
$ 8,400
$ .79
$90,000
30,000
60,000
23,500
36,500
2,500
34,000
10,200
$23,800

P5-6. (continued)
(b) THOMAS SALES COMPANY
Balance Sheet
March 31, 2008
Assets
Current Assets:
Cash ...........................................................................
Accounts receivable ...................................................
Office supplies inventory ............................................
Total current assets ................................................
Noncurrent Assets:
Automobiles ................................................. $30,000
Less accumulated depreciation ................ 10,000
Office equipment ......................................... 3,000
Less accumulated depreciation ................ 1,000
Total noncurrent assets ..........................................
Total assets ............................................................
Liabilities
Current Liabilities:
Accounts payable .......................................................
Income taxes payable .................................................
Salaries and commissions payable ............................
Total current liabilities ............................................
Long-Term Liabilities:
Note payable ..............................................................
Total liabilities .........................................................
Stockholders' Equity
Contributed capital:
Capital stock (30,000 shares, par $1) .........................
Paid-in capital .............................................................
Total contributed capital .........................................
Retained earnings (beginning balance, $7,350 + net income,
$23,800 - dividends declared and paid, $8,000) .............
Total stockholders' equity ...........................................
Total liabilities and stockholders' equity .................
$53,000
44,800
300
20,000
2,000
$20,250
10,200
1,500
30,000
5,000
35,000
23,150
$98,100
22,000
$120,100
$31,950
30,000
61,950
58,150
$120,100