Question

23. Tucker Company shows the following transactions for the accounting period ending December 31, 2019, the first year of operation: 1) Sold books to customers for $68,000 on account 2) Collected $56,000 from customers 3) Issued common stock for $16,000 cash 4) Prepaid four months' rent for $8,800 on October 1, Year 1 5) Purchased supplies for $21,000 cash 6) Physical count shows $6,500 of supplies remained on December 31, Year 1 7) Recorded adjustment for the rent purchased and used a. Prepare the Income Statement for the end of year 1. b. Prepare Income Statement Retained Earnings for the end of year 1. C. Answer the questions below Required: Answer the questions. Show your work: 30 points a) What are total revenues for 2019? b) What are the total expenses for 2019? c) What is gross margin/profit for 2019? d) What is net income for 2019? e) What is total retained earnings at the end of 2019?

Answer 1

a.

Income Statement
Sales Revenue	$           68,000
Expenses
Rent Expense	$              6,600
Supplies Expense	$           14,500
Total Expenses	$           21,100
Net Income	$           46,900

b.

Statement of Retained Earnings
Beginning Balance	$                    -
Add Net Income	$           46,900
Less Dividends	$                    -
Ending Balance	$           46,900

c.

a) Total Revenues = $68000
b) Total Expenses = $21100 or $6600 by assuming supplies as cost of goods sold
c) Gross Profit = $68000 or $46900 by assuming supplies as cost of goods sold
d) Net Income = $46900
e) Retained Earnings = $46900