LR Enterprises Inc. had the following equity account balances at December 31, 2022: Sales during 2023 totalled

Question:

LR Enterprises Inc. had the following equity account balances at December 31, 2022:

image

Sales during 2023 totalled $1,560,000 and operating expenses were $998,000. Assume that income tax is accrued at year-end at the rate of 30% of annual operating profit.

On March 1, 2023, 200,000 of the common shares were repurchased at $1.70 each and then cancelled. The board of directors declared and paid the annual cash dividend on the preferred shares on December 1 and an 8% common share dividend was declared and distributed on the same day when the market price per common share was $1.80.


Required

Preparation Component:

Use the information provided to prepare:

1. An income statement for the year ended December 31, 2023, including appropriate earnings per share information.

2. A classified balance sheet at December 31, 2023, assuming the following adjusted account balances: Cash, $168,000; Accounts Receivable, $102,000; Allowance for Doubtful Accounts, $3,500; Prepaid Insurance, $36,000; Land, $1,000,000; Building, $500,000; Accumulated Depreciation, Building, $241,000; Machinery, $1,909,600; Accumulated Depreciation, Machinery, $653,850; Furniture, $78,000; Accumulated Depreciation, Furniture, $44,000; Accounts Payable, $41,000; Notes Payable (due March 2025), $27,000.

3. What percentage of the assets is financed by debt?

4. What percentage of the assets is financed by equity?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamental Accounting Principles Volume 2

ISBN: 9781260881332

17th Canadian Edition

Authors: Kermit D. Larson, Heidi Dieckmann, John Harris

Question Posted: