ACC 221 Chapter : ShindlerEmily-ARP Pg10.pdf
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For each item described: Identify the type of account (Asset,Liability, Equity, Revenue or Gain, Expense or Loss), normalbalance (Debit, Credit), financial statement (Balance Sheet, IncomeStatement), and whether the account is closed at the end of theperiod (Yes, No) by selecting the letter that best describes thoseattributes. If an account is a contra account, the answer will showthe account type in parentheses. Answer items may beused once, more than once, or not at all.
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Prepare an Income Statement, Balance Sheet, and Statement of Changes in Shareholder's Equity. Analyze the results. The following information was obtained from the records of Shae, Inc.:
Merchandise Inventory | $132,000 |
Notes Payable, long term | $150,000 |
Sales | $450,000 |
Buildings and Equipment | $252,000 |
Selling, general, and administrative expenses | $36,000 |
Accounts Receivable | $60,000 |
Common Stock (21,000 shares) | $105,000 |
Income tax expense | $42,000 |
Cash | $96,000 |
Retained Earnings, 1/1/13 | $64,500 |
Accrued Liabilities | $9,000 |
Cost of Goods Sold | $270,000 |
Accumulated Depreciation | $108,000 |
Interest Expense | $24,000 |
Accounts Payable | $45,000 |
Dividends declared and paid during 2013 | $19,500 |
Except as otherwise indicates, 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 ended December 31, 2013. There were no changes in paid-in capital during the year.
Required:
a. Prepare an Income Statement and Statement of Changes in Shareholder's Equity for the year ended December 31, 2013, and a Balance Sheet at December 31, 2013, for Shae, Inc.
Based on the financial statements that you have prepared for part a, answer the questions in parts b-e. Provide brief explanations for each of your answers and state any assumptions you believe are necessary to ensure that your answers are correct.
b. What is the company's average income tax rate?
c. What interest rate is charged on long-term debt?
d. What is the ar value per share of common stock?
e. What proportion of the company's earnings is used for dividends?