Pope’s Garage 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.
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000
Service revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . 45,000
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . 31,000
Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Required:
a. Calculate the total current assets at December 31, 2010.
b. Calculate the total liabilities and owners’ equity 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 Pope’s Garage for 2010?
f. If $16,000 of dividends had been declared and paid during the year, what was the January 1, 2010, balance of retained earnings?