Question

Accounts receivable Depreciation expense Land Cost of goods sold Retained earnings Cash Equipment Supplies Accounts payable Service revenue Interest expense Common stock Income tax expense Accumulated depreciation Long-term debt Supplies expense Merchandise inventory Net sales $ 32,300 11,500 24,600 87,500 60,700 10,000 69,500 5,900 22,100 22,700 2,000 5,000 16,614 41,000 40,000 13,800 26,500 156,000 < Prev 3 of

Answer 1

Requirement a:

Current Assets
Cash	$10,000
Supplies	$5,900
Merchandise inventory	$26,500
Accounts receivable	$32,300
Total Current Assets	$74,700

Requirement b:

Liabilities
Accounts payable	$22,100
Long-term debt	$40,000
Total liabilities	$62,100
Stockholders' equity
Common stock	$5,000
Retained earnings	$60,700
Total stockholders' equity	$65,700
Total liabilities and stockholders' equity	$127,800

Requirement c:

Operating income
Revenues:
Net sales		$156,000
Service revenue		$22,700
Total revenues		$178,700
Less: Operating expenses
Cost of goods sold	$87,500
Depreciation expense	$11,500
Supplies expense	$13,800
Total operating expenses		$112,800
Operating income		$65,900

Requirement d:

Net income
Operating income	$65,900
Other income(Expense):
Interest expense	($2,000)
Income tax expense	($16,614)
Net income	$47,286

Requirement e:

Average income tax rate = Income tax expense ÷ Net income

= $16,614/$47,286

= 0.35135 or 35.135%

Requirement f:

Retained earnings
Beginning before dividends	$60,700
(Less): Dividends	($16,000)
Balance Jan 1,2019	$44,700