Ans
a) Caculate the total current assests at December 31, 2019.
Accounts receivable | $ 32,300.00 |
Cash | $ 11,900.00 |
Supplies | $ 5,600.00 |
Merchandise inventory | $ 29,800.00 |
Total Current Assets | $ 79,600.00 |
b) Calculate the total liabilities and shareholders’ equity at December 31, 2019.
Liabilities: | ||
Current Liabilities: | ||
Accounts Payable | $ 21,500.00 | |
Total Current Liabilities | $ 21,500.00 | |
Long-term Liabilities: | ||
Long term debt | $ 40,000.00 | |
Total Long-term Liabilities | $ 40,000.00 | |
Shareholders’ equity : | ||
Common stock | $ 10,000.00 | |
Retained earnings | $ 58,400.00 | |
Total Shareholders' Equity | $ 68,400.00 | |
Total liabilities and shareholders’ equity | $ 129,900.00 |
c) Calculate the earnings from operations (operating income) for the year ended December 31, 2019.
Service revenue | $ 26,500.00 | |
Sales revenue | $153,000.00 | |
Total Revenue | $ 179,500.00 | |
Less: | ||
Cost of goods sold | $ 85,500.00 | |
Depreciation expense | $ 10,600.00 | |
Supplies expense | $ 13,400.00 | $ 109,500.00 |
Operating Income | $ 70,000.00 |
d) Calculate the net income (or loss) for the year ended December 31, 2019.
Operating Income | $ 70,000.00 | |
Less: | ||
Interest Expense | $ 3,300.00 | |
Income Tax Expense | $ 15,341.00 | $ 18,641.00 |
Net Income | $ 51,359.00 |
e) What was the average income tax rate for Pope’s Garage for 2019.
Average income tax rate = Income tax Expense / Income before income taxes
Income before income taxes
Net Income after taxes | $ 51,359.00 |
Add : Income Tax Expense | $ 18,641.00 |
Income before income taxes | $ 66,700.00 |
Average income tax rate = $ 15,341 / $ 66,700 = 0.23 or 23%
Average income tax rate = 23%
f) If $18,500 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings?
Beginning Balance of Retained Earnings: | |
Ending Balance of Retained Earnings on Dec 31, 2019 | $ 58,400.00 |
Less : Net Income after tax | $ 51,359.00 |
Add : Dividend Declared | $ 18,500.00 |
Beginning Balance of Retained Earnings on Jan 01,2019 | $ 25,541.00 |
Pope's Garage had the following accounts and amounts in its financial statements on December 31, 2019....
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