The following information was obtained from the records of Breanna, Inc.: Accounts receivable . . . .
Question:
The following information was obtained from the records of Breanna, Inc.:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 10,000
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . 52,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Selling, general, and administrative expenses . . . . . . . 34,000
Common stock (9,000 shares) . . . . . . . . . . . . . . . . . . . 90,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Retained earnings, 1/1/10. . . . . . . . . . . . . . . . . . . . . . . 23,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . 37,000
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Dividends declared and paid during 2010 . . . . . . . . . . 12,000
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2010, and that all income statement items reflect activities that occurred during the year ended December 31, 2010. There were no changes in paid-in capital during the year.
Required:
a. Prepare an income statement and statement of changes in owners’ equity for the year ended December 31, 2010, and a balance sheet at December 31, 2010, for Breanna, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b–e. Provide brief explanations for each of your answers and state any assumptions you believe are necessary to ensure that your answers are correct.
b. What is the company’s average income tax rate?
c. What interest rate is charged on long-term debt?
d. What is the par value per share of common stock?
e. What is the company’s dividend policy (i.e., what proportion of the company’s earnings are used for dividends)?
Financial StatementsFinancial 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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
a BREANNA INC Income Statement For the Year Ended December 31 2010 Sales 200000 Cost of goods sold 1...View the full answer
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
