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Cuppa Beverage Ltd. has just completed its first year of operations. Presented below are its income statement and statement o

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Answer #1

Income Statement Sales Operating expenses Depreciation expense Profit before income tax expense Income tax Profit 37000 31000

Explanation:

1) Total Assets = Total Liabilities and shareholders' equity = 19800

2) Accumulated Depreciation = Cost of Equipment - Book Value of Equipment

= 13000 - 11000 = 2000

3) Cash = Total Assets - Accounts Receivable - Inventory - Prepaid Rent - Equipment

= 19800 - 200 - 5500 - 600 - 11000 = 2500

4) Retained Earnings = Total shareholders' equity - Common shares

= 12300 - 9300 = 3000

5) Bank loan = Total Liabilities - Accounts payable

= 7500 - 5500 = 2000

6) Profit = Balance in Retained Earnings , i.e 3000

7) Profit + Income tax = Profit before income tax expense

3000 + 1000 = 4000

8) Depreciation expense = Balance in Accumulated Depreciation i.e 2000

9) Sales = Profit before income taxes + Depreciation expense + operating expense

= 4000 + 2000 + 31000 = 37000

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