Garys TV had the following accounts and amounts in its financial statements on December 31, 2010. Assume

Question:

Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2010. Assume that all balance sheet items reflect account balances at December 31, 2010, and that all income statement items reflect activities that occurred during the year then ended.

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,000

Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000

Accumulated depreciation. . . . . . . . . . . . . . . . . . . . 24,000

Notes payable (long-term) . . . . . . . . . . . . . . . . . . . . 280,000

Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000

Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . 840,000

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 192,000

Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . 12,000

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . 1,760,000

Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . 240,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 92,000

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,480,000

Required:

a. Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2010.

b. Calculate the total assets at December 31, 2010.

c. Calculate the earnings from operations (operating income) for the year ended December 31, 2010.

d. Calculate the net income (or loss) for the year ended December 31, 2010.

e. What was the average income tax rate for Gary’s TV for 2010?

f. If $256,000 of dividends had been declared and paid during the year, what was the January 1, 2010, balance of retained earnings?

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