sales 201,000Equipment 128,000Selling, general, and administrative expenses 32,000Common stock (8,700 shares) 90,000Accounts payable 14,300Retained earnings, 1/1/19 30,000Interest expense 5,600Merchandise inventory 38,600Long-term debt 38,000Dividends declared and paid during 2019 16,200

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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 Breanna Inc.

Accounts receivable$10,700Accumulated depreciation 50,800Cost of goods sold 123,000Income tax expense 8,000Cash 62,000Net sales 201,000Equipment 128,000Selling, general, and administrative expenses 32,000Common stock (8,700 shares) 90,000Accounts payable 14,300Retained earnings, 1/1/19 30,000Interest expense 5,600Merchandise inventory 38,600Long-term debt 38,000Dividends declared and paid during 2019 16,200 

Item1
 
 

Time Remaining 2 hours 32 minutes 36 seconds

02:32:36
 
 

Item 1

 

Time Remaining 2 hours 32 minutes 36 seconds

02:32:36

The information on the following page was obtained from the records of Breanna Inc.:
 

     
Accounts receivable $ 10,700
Accumulated depreciation   50,800
Cost of goods sold   123,000
Income tax expense   8,000
Cash   62,000
Net sales   201,000
Equipment   128,000
Selling, general, and administrative expenses   32,000
Common stock (8,700 shares)   90,000
Accounts payable   14,300
Retained earnings, 1/1/19   30,000
Interest expense   5,600
Merchandise inventory   38,600
Long-term debt   38,000
Dividends declared and paid during 2019   16,200
 


Except as otherwise indicated, 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 ended December 31, 2019. There were no changes in paid-in capital during the year.

Required:

  1. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2019, and a balance sheet at December 31, 2019, for Breanna Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e.
  2. What is the company's average income tax rate?
  3. What interest rate is charged on long-term debt? Assume that the year-end balance of long-term debt is representative of the average long-term debt account balance throughout the year.
  4. What is the par value per share of common stock?
  5. What is the company's dividend policy (i.e., what proportion of the company's earnings is used for dividends)?
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