Maurice Tutor
$15/per page/Negotiable
P2.18 - Gary's TV had the following accounts and amounts
in its financial statements on December 31, 2013. Assume that all balance sheet items
reflect account balances at December 31, 2013, and that all income statement items
reflect activities that occurred during the year then ended.
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . .
Notes payable (long-term) . . . . . . . . . . . . . . . . . . . . .
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 18,000
40,000
12,000
140,000
36,000
420,000
96,000
6,000
64,000
450,000
72,000
880,000
36,000
120,000
46,000
1,240,000
Required:
a. Calculate the difference between current assets and current liabilities for Gary's
TV at December 31, 2013.
b. Calculate the total assets at December 31, 2013.
c. Calculate the earnings from operations (operating income) for the year ended
December 31, 2013.
d. Calculate the net income (or loss) for the year ended December 31, 2013.
e. What was the average income tax rate for Gary's TV for 2013?
f. If $128,000 of dividends had been declared and paid during the year, what was
the January 1, 2013, balance of retained earnings?
Â
YOU DO NOT HAVE TO ANSWER THE QUESTIONS. JUST FILL OUT THE NUMBERS BELOW FOR FULL CREDIT.
Â
|
P2.18. |
||
|
a. |
Merchandise inventory |
$420,000 |
|
Accounts receivable |
$96,000 |
|
|
Cash |
$72,000 |
|
|
Total current assets |
 | |
|
Less: Accounts payable * |
$46,000 |
|
|
Current assets less current liabilities |
 | |
|
* No other current liabilities are included in the problem. |
 | |
| Â | ||
|
b. |
Total current assets |
 |
|
Land |
$64,000 |
|
|
Equipment |
$36,000 |
|
|
Accumulated depreciation |
 | |
|
Total assets |
 | |
| Â | ||
|
c. |
Sales revenue |
$1,240,000 |
|
Cost of goods sold |
$880,000 |
|
|
Gross profit |
 | |
|
Rent expense |
$36,000 |
|
|
Depreciation expense |
$6,000 |
|
|
Earnings from operations (operating income) |
 | |
| Â | ||
|
d. |
Earnings from operations (operating income) |
 |
|
Interest expense |
$18,000 |
|
|
Earnings before taxes |
 | |
|
Income tax expense |
$120,000 |
|
|
Net income |
 | |
| Â | ||
|
e. |
Average tax rate |
 |
| Â | ||
|
f. |
Retained earnings, January 1, 2013 |
 |
|
Net income for the year |
 | |
|
Dividends declared and paid during the year |
 | |
|
Retained earnings, December 31, 2013 |
||