P2.20 - Prepare an income statement, balance sheet, and statement of changes in

Question

P2.20 - Prepare an income statement, balance sheet, and statement of changes

in stockholders

Prepare an income statement, balance sheet, and statement of changes in stockholders' equity; analyze results The following information was obtained from the records of Shae, Inc.: Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2013, and that all income statement items reflect activities that occurred during the year ended December 31, 2013. There were no changes in paid-in capital during the year.

Explanation / Answer

Please see answers below:

b. What is the company

Income Statement Sales $          450,000 Less: Cost of Goods Sold $          270,000 Gross Profit $          180,000 Less: Selling, general, and administrative expenses $            36,000 Operating Profit $          144,000 Interest Rate Less: Interest Expense $            24,000 16% Profit Before Taxes $          120,000 Average Income Tax Rate Less: Income Taxes $            42,000 35% Net Profit after Taxes $            78,000

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