Question

Pope's Garage had the following accounts and amounts in its financial statements on December 31, 2019. Assume that all balance sheet items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year then ended. 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 $ 31,600 11,100 25,700 86,000 65,600 11,400 68,500 5,600 21,100 23,800 2,100 6,000 23,925 43,000 36,000 13,100 28,900 171,000 Required: a. Calculate the total current assets at December 31, 2019. b. Calculate the total liabilities and stockholders' equity at December 31, 2019 c. Calculate the earnings from operations (operating income) for the year ended December 31, 2019. d. Calculate the net income (or loss) for the year ended December 31, 2019 e. What was the average income tax rate for Pope's Garage for 2019? f. If $16.500 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings? a. Total current assets Total liabilities and stockholders' equity c. Operating income e. Average income tax rate f. Retained earnings

Answer 1

Dear Student , Below answer is quite straight forward .. Only tweak in last F Q&A - need to derive opening retained Earnings .. Please go through step by step ,

Thank You .  

	Pope'S George
A)	Calculate Current Asset As on 31st Dec 2019
		Amount($)
	Account Receivable	31,600
	Cash	11,400
	Supplies	5,600
	Mechandise Inventory	28,900
	Total Current Assets	77,500
B)	Calculate Total Liabilities + Stockholders Equity As on 31st Dec 2019
	Retained Earnings	65,600
	Account payable	21,100
	Common Stock	6,000
	Long term debt	36,000
	Total Liabilities + Stockholders Equity	1,28,700
C)	Calculate Operating Income As on 31st Dec 2019	Amount($)	Amount($)
	Net Sales-A		1,71,000
	Add - Serviice Revenue -A1		23,800
	Less
	Cost of goods sold	86000
	Supplies Expenses	13100
	Depreciation Expenses	11100
	Total Cost -B		1,10,200
	Earnings from Operation ( Operating Income)(A+A1-B)		84,600
D)	Calculate Net income ( or Loss) As on 31st Dec 2019		Amount($)
	Earnings from Operation ( Operating Income)		84,600
	Less
	Interest Expense	2100
	Profit Before Tax-M		82,500
	Less - Income Tax expenses-N		23,925
	Net Profit		58,575
E)	Average Income Tax rate - 2019
	Income Tax expenses - N ( as above)		23,925
	Profit Before Tax-M ( as above)		82,500
	Average Income Tax rate - 2019(N/M)		29%
F)	If $16500 dividend declared , what will be Retained Earning in 1st Jan 2019
	We need to calculate Opening Retained Earnings		Amount($)
	RetainedEarnings - 31st Dec '2019( Closing)		65,600
	Less - net Income as derived above		-58,575
	Add- Dividend declared		16,500
	RetainedEarnings - 1st Jan '2019( Opening )		23,525