Question

Emerging Enterprises Corporation's capital structure consists of 40,000 common shares. At December 31, 2016 an analysis of the accounts and discussions with company officials revealed the following information:

Sales………………………………………………………………………………………….. $2,400,000

       Purchase discounts………………………………………………………………..         36,000

       Purchases…………………………………………………………………………….    1,440,000

       Earthquake loss (net of $36,000 tax) ……………………………………….         84,000

       Selling expenses……………………………………………………………………       256,000

       Cash…………………………………………………………………………………….       120,000

       Accounts receivable……………………………………………………………….       180,000

       Common shares…………………………………………………………………….       400,000

       Accumulated depreciation………………………………………………………       360,000

       Dividend revenue…………………………………………………………………..         36,000

       Inventory, January 1, 2016……………………………………………………..       304,000

       Inventory, December 31, 2016………………………………………………..       250,000

       Unearned service revenue………………………………………………………           8,800

       Accrued interest payable………………………………………………………..           2,000

       Land……………………………………………………………………………………..       740,000

       Patents…………………………………………………………………………………       200,000

       Retained earnings, January 1, 2016…………………………………………       540,000

       Interest expense…………………………………………………………………….         34,000

       Cumulative effect of change from straight-line to accelerated

       depreciation (net of $30,000 tax)……………………………………………..         70,000

       General and administrative expenses……………………………………….       320,000

       Dividends declared…………………………………………………………………         58,000

       Allowance for doubtful accounts………………………………………………         10,000

       Notes payable (maturity July 1, 2017)………………………………………       400,000

       Machinery and equipment………………………………………………………       900,000

       Materials and supplies…………………………………………………………….         80,000

       Accounts payable…………………………………………………………………..       120,000

       Accumulated other comprehensive income, January 1, 2016 ……     130,000

The assistant has not yet made entries for the following:

            Depreciation expense (80% selling and 20% administration)………..120,000

            Supplies expense (70% administration, 30% selling) ………………… 40,000                

            Unrealized gain FV-NI investments ……………………………………. 30,000

            Unrealized gain FV-OCI investments …………………………………. 130,000

Unless indicated otherwise, you may assume a 30% income tax rate.

Instructions

a)    Prepare, in good form, a multiple-step income statement. Show Earnings per share.

b)    Prepare, in good form, a partial statement of Changes in Shareholder’s equity that includes columns for retained earnings and Accumulated other comprehensive income (AOCI).