Question

Prepare the financial statements from the information that has been provided.

Answer 1

Question 1:

Income Statement
Particulars	Amount ($)
Sales	$800,000
Less: COGS	-$512,000
Gross Profit	$288,000
Less: Operating Expenses
Selling, General & Admin Expenses	-$136,000
Income Before Depreciation, Interest and Taxes	$152,000
Less: Depreciation Expense	-
Income Before Interest and Taxes	$152,000
Less: Interest Expense	-$24,000
Income Before Taxes	$128,000
Less: Income Tax Expense	-$32,000
Net Income	$96,000

 

Retained Earnings Statement
Particulars	Amount ($)
Opening Retained Earnings	92000
Add: Income	96000
Less: Dividends Declared and Paid	-48000
Closing Retained Earnings	140000

 

Question 2:

 

Company's Income Tax Rate = 32000 / 128000 * 100 = 25%

 

Question 3:

 

Interest Rate Charged = 24000 / 160000 * 100 = 15%

 

Question 4:

 

Par Value per share = $ 360,000 / 36000 shares = $ 10 / share

 

Question 5:

 

Dividend Payout = $ 48,000 / $ 96,000 = 50%

1. Net Income: $96,000       Closing Retained Earnings: $140,000

2. Tax Rate: 25%

3. Interest Rate: 15%

4. Par Value per Share: $10

5. Dividend Payout: 50%