The following question(s) refer to the year-end account balances for Solar Solut

Question

The following question(s) refer to the year-end account balances for Solar Solutions, nc. The accounts are listed i alphabetical order, NOT in the order they appear on the financial statements. The applicable tax rate is 30%. Income Statement Cost of Goods Sold Interest Expense Operating Expense (excluding depreciation) Sales Tax 330 20 115 600 72? Balance Sheet Accounts Payable Accounts Receivable Accruals Accumulated Depreciation Cash Common Stock Fixed Assets (gross) Inventory Long Term Debt Retained Earnings 35 65 30 (175) 35 20 390 35 200 65 1. What was the company.'s earnings before interest and taxes (EBIT)? a. $155 b. $120 c. $100 d. $215 What is the company's tax liability? a. $41.50 b. $40.00 C. $41.50 d. $39.50 e. $41.00 3. What was Solar's Net Income? a. $94.50 b. $105.50 C. $95.50 d. $90.50 e. $92.50 4. What is Solar's Total Assets? a. $420

Explanation / Answer

1 Answer is a. $ 155. Explanation: Sales revenue 600 Less: Cost of goods s old 330 Less: Operating expenses 115 EBIT 155 2 Answer is a. 40.50 Explanation: EBIT 155 less: interest 20 EBT 135 Tax @ 30% 40.5 3 Answer is a. 94.50 Explanation: EBT 135 Less: Tax 40.5 Net income 94.5 4 Answer is $ 450. Explanation: Total assets: Accounts receivable 65 Cash 35 Inventory 135 Net fixed assets (390-175) 215 Total assets: 450

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