Question

1)Prepare an ending 2014 Income Statement and Balance Sheet from the following information: Sales $800,000; Cost of Goods Sold $300,000; Accounts Receivables $20,000; Bonds Outstanding $160,000; Accounts Payable $20,000; Advertising Expense $1,000; Administrative Expenses $35,000; Interest Expense $24,000; Depreciation Expense $40,000; Dividends Paid $137,000; Rent Expense $5,000; Accruals $20,000; Common Stock $100,000; Retained Earnings $245,000 (Beginning 0f 2014); Cash $20,000; Inventory $45,000; Net Fixed Assets $600,000 (Beginning of 2014). (Assume a 40% Tax Rate)

Answer 1

Income Sstatement
Sales			800000
Less: Cost of goods sold			300000
Gross Profit			500000
Less: expenses
Advertising expense			1000
Admin expense			35000
Interest expens			24000
Depreciation expenses			40000
Rent expenses			5000
Income before tax			395000
Less: tax @ 40%			158000
After tax Income			237000
Statement of RE:
Beginning balance			245000
Add: Net Income			237000
Sub-total			482000
Less: Dividend			137000
Ending balance of RE			345000
Balance Sheet:
Assets:
Current assets:
Cash		20000
Accounts receivable		20000
Inventory		45000
Total Current assets			85000
Fixed assets			560000	(600000-40000)
Total Assets			645000
Liabilities and Equity:
Liabilities:
Accounts payable			20000
Accruals			20000
Bonds Payable			160000
Total liabilities			200000
Stockholder's equity:
Common Stock			100000
Retained earnings			345000
Total Stockholder's equity			445000
Total Liabilities and Equity			645000