Pope’s Garage had the following accounts and amounts in its financial statements
ID: 2487575 • Letter: P
Question
Pope’s Garage 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.
171,000
Calculate the total current assets at December 31, 2013
Calculate the total liabilities and stockholders’ equity at December 31, 2013
If $17,500 of dividends had been declared and paid during the year, what was the January 1, 2013, balance of retained earnings?
Accounts receivable $ 30,600 Depreciation expense 11,500 Land 26,600 Cost of goods sold 88,500 Retained earnings 64,500 Cash 10,200 Equipment 68,500 Supplies 5,500 Accounts payable 20,000 Service revenue 27,700 Interest expense 1,300 Common stock 9,000 Income tax expense 18,348 Accumulated depreciation 40,000 Long-term debt 37,000 Supplies expense 14,000 Merchandise inventory 29,100 Sales revenue171,000
Required: a.Calculate the total current assets at December 31, 2013
b.Calculate the total liabilities and stockholders’ equity 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 Pope’s Garage for 2013?If $17,500 of dividends had been declared and paid during the year, what was the January 1, 2013, balance of retained earnings?
Explanation / Answer
Pope's Garage All Amounts in $ a. Total Current Assets as on December 31, 2013 Cash 10200 Accounts Receivable 30600 Supplies 5500 Merchandise Inventory 29100 Total 75400 b. Total Liabilities and Equity as on December 31, 2013 Current Liabilities Accounts Payable 20000 Long-Term Liabilities Long-Term Debt 37000 Shareholders' Equity Common Stock 9000 Retained Earnings 64500 Total 130500 c. Operating Income for the year ended 31 December, 2013 Sales Revenue 171000 Service Revenue 27700 Less : Cost of Goods Sold 88500 Less : Supplies Expense 14000 102500 Operating Income 96200 d. and e. Net Profit or (Loss) for the year ended 31 December , 2013 Operating Income as above 96200 Less : Depreciation Expense 11500 Less : Interest Expense 1300 12800 Net Profit before taxes 83400 Income Tax Expense 18348 22% average tax rate for Pope's Garage Net Profit for the year post taxes 65052 Dividends declared and paid during the year is $ 17,500 Retained Earnings as on January 1, 2013 16948 Profit for the year 65052 Dividends declared and paid 17500 Retained Earnings as on December 31, 2013 64500