Question
The following account balances were included in the trial balance of Fernhollow Corporation at June 30, 2027.
| Sales Revenue | $2,367,750 | Depreciation Expense (Office
Furniture and Equipment) | $10,875 |
| Sales Discounts | 46,725 | Property Tax Expense | 10,980 |
| Cost of Goods Sold | 1,345,155 | Bad Debt Expense (Selling) | 7,275 |
| Salaries and Wages Expense (Sales) | 84,390 | Maintenance and Repairs Expense (Administration) | 13,695 |
| Sales Commissions | 146,400 | Office Expenses | 9,000 |
| Travel Expense (Sales persons) | 43,395 | Sales Returns and Allowances | 93,450 |
| Delivery Expense | 32,100 | Dividend Revenue | 57,000 |
| Entertainment Expense | 22,230 | Interest Expense | 27,000 |
| Telephone and Internet Expense (Sales) | 13,545 | Income Tax Expense | 153,000 |
| Depreciation Expenses (Sales Equipment) | 7,470 | Depreciation Understatement Due
to Error - 2019 (net of tax) | 26,550 |
| Maintenance and Repairs Expenses (Sales) | 9,300 | Dividends (Declared on Preference
Shares) | 13,500 |
| Miscellaneous Selling Expenses | 7,072.50 | Dividends (Declared on Ordinary
Shares) | 55,500 |
| Supplies Expense | 5,175 | Telephone and Internet Expense
(Administration) | 4,230 |
The Retained Earnings account had a balance of $505,500 at July 1, 2017. There are 80,000 ordinary shares outstanding.
Instructions: Prepare an income statement for the year ended June 30, 2027.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 33 — Earnings per Share
Basic EPS is profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding. Both halves need care: the numerator is after preference dividends, and the denominator weights each share issue by the fraction of the year it was outstanding.
Common mistakes
- Using the closing share count instead of the weighted average.
- Failing to deduct preference dividends from profit before dividing.
- Time-weighting a bonus issue or share split — these are treated as though they existed for the whole of every period presented, including comparatives.