Question
The following information was obtained from the records of Shae, Inc.: Merchandise inventory $ 162,000 Notes payable (long-term) 180,000 Sales 540,000 Buildings and equipment 324,000
The following information was obtained from the records of Shae, Inc.:
Merchandise inventory $ 162,000 Notes payable (long-term) 180,000 Sales 540,000 Buildings and equipment 324,000 Selling, general, and administrative expenses 54,000 Accounts receivable 81,000 Common stock (30,000 shares) 270,000 Income tax expense 32,400 Cash 313,326 Retained earnings, 1/1/16 166,050 Accrued liabilities 10,800 Cost of goods sold 324,000 Accumulated depreciation 145,800 Interest expense 54,000 Accounts payable 54,000 Dividends declared and paid during 2016 21,924
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paid-in capital during the year.
Required:
a. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e.
b. What is the company's average income tax rate?
c. What interest rate is charged on long-term debt?
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