Uranium Mining Company, founded in 1982 to mine and market uranium, purchased a mine in 1983 for $900 million. It estimated that the uranium had a market value of $150 per ounce. By 2012, the market value had increased to $300 per ounce. Records for 2012 indicate the following:
Production 200,000 ounces
Sales 230,000 ounces
Deliveries 190,000 ounces
Cash Collection 210,000 ounces
Costs of production including the depletion $50,000,000
Selling expense $2,000,000
Administrative expenses $1,250,000
Tax rate 50%
"Production cost per ounce has remained constant over the last few years, and the company has
maintained the same production level.Requireda. Compute the income for 2012, using each of the following bases:1. Receipt of cash2. Point of sale3. End of production4. Based on deliveryb. Comment on when each of the methods should be used. Which method should UraniumMining Company use?
P 4-10. The following items are from Taperline Corporation on December 31, 2012. Assume a flat 40% corporate tax rate on all items, including the casualty loss.
Rental income 3,600
Gains on the sale of fixed assets 3,000
General and administrative expenses 110,000
Selling expenses 97,000
Interest expense 1,900
Depreciation for the period 10,000
Extraordinary item (casualty loss – pretax) 30,000
Cost of sales 300,000
Common stock (30,000 shares outstanding) 150,000
a. Prepare a single-stem income statement for the year ended December 31, 2012. Include earnings per share for earnings before extraordinary items and net income.
b. Prepare a multiple-step income statement. Include earnings per share for earnings before extraordinary items and net income.