Pope\'s garage had the following accounts and amounts in its financial statement
ID: 2492385 • Letter: P
Question
Pope's garage had the following accounts and amounts in its financial statements on december 31, assume that all balance sheet items reflect account balances at december 31, 2013, and that all inc statement items reflect activities that occured during the year then ended. Calculate the total current assets at December 31, 2013. Calculate the total liabilities and stockholders' equity at December 31, 2013. Calculate the earnings from operations (operating income) for the year ended December 31, 201: Calculate the net income (or loss) for the year ended December 31, 2013. What was the average income tax rate for Pope's Garage for 2013?Explanation / Answer
Answer a. Calculation of Total Current Assets at Dec 31, 2013 Accounts Receivables 32,600 Cash 9,900 Supplies 5,600 Merchandise Inventory 29,800 Total Current Assets 77,900 Answer b. Calculation of Total liabilities & Stockholders' Equity As on Dec 31, 2013 Liabilities Accounts Payable 22,100 Long Term debt 39,000 Total Libilities 61,100 Stockholders' Equity Common Stock 10,000 Retained Earnings 61,100 Total Stockholders' Equity 71,100 Total Liabilities & Stockholders' Equity 132,200 Answer c. Calculation of Earnings From Operations for the year ended Dec 31, 2013 Sales 173,000 Less: Cost of goods sold (89,000) Gross Margin 84,000 Less: Expenses Dep. Exp. (11,500) Supplies Exp. (13,500) (25,000) Add: Service Revenue 20,100 Operating Income 79,100 Answer d. Calculation of Net Income for the year ended Dec 31, 2013 Operating Income 79,100 Less: Interest exp. (2,200) Earnings before I Tax 76,900 Income TaxExpense (21,532) Net Income 55,368 Answer e. Average Income Tax Rate = 21532 (Income Tax Exp.) / 76900 (Earning Before I Tax) Average Income Tax Rate = 28%