Question
Please solve the following question in detailed steps with explanation. I will make sure to give a thumbs up. Thank you. A firm has $90,000
Please solve the following question in detailed steps with explanation. I will make sure to give a thumbs up. Thank you.
- A firm has $90,000 in direct materials costs and $60,000 in direct labor costs, with another $30,000 in overhead in 2022. It has equipment that was purchased for $900,000 and is being depreciated towards a salvage value of $100,000 over 5 years. The firm purchased land this year for $800,000 and paid a dividend of $120,000. Its selling, general and administrative costs are $110,000. It also borrowed $2 milllion at 8 percent interest and is in the 27 percent tax bracket.
If the firms net income is $60,000 for 2022, (a) use any relevant information from the facts above to complete this firms income statement in 2022, solving algebraically for any missing items. (Hint: You will likely find it useful to solve backwards, starting with Net Income and working your way up to Sales.) (b)Calculate the ending balance in retained earnings on Dec 31, 2022 if the retained earnings balance on Dec 31, 2021 was $820,000?
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