Popes Garage 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.

Accounts receivable	$	99,000
Depreciation expense		36,000
Land		81,000
Cost of goods sold		270,000
Retained earnings		177,000
Cash		27,000
Equipment		213,000
Supplies		18,000
Accounts payable		69,000
Service revenue		60,000
Interest expense		12,000
Common stock		30,000
Income tax expense		36,000
Accumulated depreciation		135,000
Long-term debt		120,000
Supplies expense		42,000
Merchandise inventory		93,000
Net sales		420,000

Required:

1. Calculate the total current assets at December 31, 2019.
2. Calculate the total liabilities and stockholders equity at December 31, 2019.
3. Calculate the earnings from operations (operating income) for the year ended December 31, 2019.
4. Calculate the net income (or loss) for the year ended December 31, 2019.
5. What was the average income tax rate for Popes Garage for 2019?
6. If $48,000 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings?

Explanation:

a.

	$
Total current assets

b.

Total liabilities and stockholders equity	$

c.

Earnings from operations (operating income)	$

d.

Net income	$

e. income tax expense / earnings before taxes = average tax rate.

f.

Retained earnings, December 31, 2019	$

Solving the model, the beginning retained earnings balance must have been $_______, because the account balance increased by $________ during the year to an ending balance of $177,000.