Please Calculate the Working Capital of the Clothing Outlet, Inc. As of December 31, 2016. Thanks!
Retained Earnings
Balance Sheet
Closing Entry
1 The following account balances are available for The Clothing Outlet, Inc., a discount retailer, as of and for the year ended December 31, 2016, except for the retained earnings balance which is stated below as of January 1, 2016: Cash. $2,638,000 Accounts receivable. ..$5,000,000 Marketable securities. $20,000,000 Prepaid insurance....... $2,400,000 Inventory.. ..$6,000,000 Equipment.. .$50,000,000 Accumulated depreciation: equipment...$8,000,000 Buildings.... $52,700,000 Accumulated depreciation buildings......$15,000,000 Land... ..$6,000,000 Investments (long-term). ..$4,000,000 Accounts payable.... $10,000,000 Income taxes payable. $6,000,000 Salaries payable.. $4,000,000 Dividends payable.. ..$3,000,000 Interest payable... ..$500,000 Unearned Revenue. ..$700,000 Notes payable (long-term). ..$4,100,000 Bonds payable (long term). $8,000,000 Common stock..... ..$21,000,000 Retained Earnings (as of Jan. 1, 2016)...$8,400,000 Dividends declared... $5,000,000 Sales......... $220,000,000 Cost of goods sold.. .$52,800,000 Interest revenue... $1,500,000 Interest expense. ..$5,200,000 Income tax expense. ...(tax rate 38%) Selling expenses: Sales salaries and commissions. $18,000,000 Insurance expense... ...$5,600,000 Advertising expense... $8,500,000 Utilities expense.. $7,000,000 Depreciation expense: equipment. .$600,000 Delivery expense.. $700,000 General and administrative expenses: Executive and administrative salaries......$12,700,000 Utilities expense.. ..$4,200,000 Rental expense..... $800,000 Depreciation expense: buildings. $500,000 Solution: Multi-step income statement Revenues: Amount s Amount S Amounts Sales reve revenue 220,000,000 Less: cost of goods sold 52.800.000 Gross profit on sales 167,200,000 Operating expenses: Selling expense: Sales salaries and commission 18,000,000 Insurance expense 5,600,000 Advertising expense 8,500,000 Utilities expense 7,000,000 Depreciation expense - equip. 600,000 Delivery expense 700,000 Total selling expense 40,400,000 General and administrative expense: Executive and admin. Salaries 12,700,000 Utilities expense 4,200,000 Rental expense 800,000 Depreciation expense buildings 500.000 Total general and admin. Expense 18.200.000 Total operating expense 58.600.000 Net income from operation 108,600,000 Other income: Interest revenue 1,500,000 Other expense: Interest expense 5.200.000 Non-operating expense 3,700,000 Net income before tax 104,900,000 Less: income tax @38% 39.862.000 Net income after tax 65.038.000 Particulars Amount 8400000 Opening Balance as on 01st Jan, 2016 Add: Net Income after Tax 65038000 Less: Dividend Declared -5000000 Closing Balance as on 31st December 2016 68438000 Amounts Clothing Outlet, Inc. Balance Sheet as at December 31, 2016: Assets Current Assets : Cash Accounts receivable Inventory Marketable securities Prepaid insurance Total Current Assets Amounts Liabilities and Shareholders Equity Current Liabilities: 2,638,000 Accounts Payable 5,000,000 Income taxes Payable 6,000,000 Salaries Payable 20,000,000 Dividends Payable 2,400,000 Interest Payable 36,038,000 Unearned revenue Total Current Liabilities 10,000,000 6,000,000 4,000,000 3,000,000 500,000 700,000 24,200,000 Non-Current Assets: Long term investments : Investments Total Long term investments 4,100,000 8,000,000 12,100,000 36,300,000 Property, Plan and Equipment:- Land Equipment Less: Accumulated depreciation - equipment Building Less: Accumulated depreciation - building Total Property, Plan and Equipment Non-Current Liabilities: 4,000,000 Notes Payable 4,000,000 Bonds Payable Total Non-Current Liabilities Total Liabilities 6,000,000 50,000,000 (8,000,000) Shareholders Equity :- 52,700,000 Common Stock (15,000,000) Retained earnings 85,700,000 Total Shareholders Equity :- 21,000,000 68,438,000 89,438,000 Total Assets 125,738,000 Total Laibilities & Sharehodlers Equity 125,738,000 220,000,000 1,500,000 31-Dec-16 Sales Interest revenue To Income sumamry (Entry for closure of revenue accounts) 221,500,000 156,462,000 31-Dec-16 Income sumamry To Cost of goods sold To Executive and administrative salaries To Utilities expense To Rental expense To Depreciation expense: buildings To Sales salaries and commissions To Insurance expense To Advertising expense To Utilities expense To Depreciation expense: equipment To Delivery expense To Interest expense To Income tax expense (Entry for closure of expense accounts) 52,800,000 12,700,000 4,200,000 800,000 500,000 18,000,000 5,600,000 8,500,000 7,000,000 600,000 700,000 5,200,000 39,862,000 65,038,000 31-Dec-16 Income sumamry To Retained earnings (Entry for closure of Net income to retained earnings) 65,038,000 5,000,000 31-Dec-16 Retained earnings To Dividends 5,000,000
