Garys TV had the following accounts and amounts in its financial statements on December 31, 2019. Assume

Question:

Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2019. Assume that all balance sheet items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year then ended.

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,500
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Notes payable (long-term) . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000


Required:

a. Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2019.

b. Calculate the total assets at December 31, 2019.

c. Calculate the earnings from operations (operating income) for the year ended December 31, 2019.

d. Calculate the net income (or loss) for the year ended December 31, 2019.

e. What was the average income tax rate for Gary’s TV for 2019?

f. If $32,000 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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