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tamaranim1 [39]
2 years ago
13

The following is the general ledger for ABC Company as of December 31, 20X1. Use this information to answer questions (1) throug

h (4).
ABC Company

General Ledger

As of December 31, 20X1

Amount

Assets

Cash

$29,400

Accounts receivable

8,100

Supplies

4,900

Prepaid rent

20,200

Equipment (net)

63,800

Liabilities

Accounts payable

$ 6,300

Salaries payable

4,000

Interest payable

1,100

Utilities payable

3,700

Bonds payable

38,400

Stockholders' equity

Common stock

$60,900

Retained earnings

0

Dividends

2,100

Revenues

Sales revenue

$54,200

Interest revenue

1,400

Expenses

Cost of goods sold

$15,100

Salaries expense

7,100

Rent expense

4,900

Supplies expense

1,300

Utilities expense

4,800

Depreciation expense

2,500

Interest expense

2,100

Income tax expense

3,700

What is the amount of gross profit to be reported on ABC Company’s 12/31/X1 income statement?

$40,500

$14,100

$39,100

$17,800

What is the amount of operating income (EBIT) to be reported on ABC Company’s 12/31/X1 income statement?

$36,100

$18,500

$14,800

$14,100

What is the amount of earnings before taxes (EBT) to be reported on ABC Company’s 12/31/X1 income statement?

$15,000

$17,800

$12,000

$18,500

What is the amount of net income to be reported on ABC Company’s 12/31/X1 income statement?

$17,800

$12,000

$14,100

$18,500
Business
1 answer:
sweet [91]2 years ago
5 0

Answer:

What is the amount of gross profit to be reported on ABC Company’s 12/31/X1 income statement?

Gross Profit = Sales Revenue - Cost of Goods Sold

                    = $54,200 - 15,100

                    = $39,100

What is the amount of operating income (EBIT) to be reported on ABC Company’s 12/31/X1 income statement?

EBIT = Sales Revenue - Cost of Goods Sold - Operating Expenses

We have the following operating expenses:

Salaries expense $7,100

Rent expense = $4,900

Supplies expense = $1,300

Utilities expense = $4,800

Depreciation expense = $2,500

Total operating expenses = $20,600

Now we substract this figure from the gross profit we found above

EBIT = $39,100 - 20,600

        = $18,500

What is the amount of earnings before taxes (EBT) to be reported on ABC Company’s 12/31/X1 income statement?

EBT = Sales Revenues + Interest Revenue - Cost of Goods Sold - Operating Expenses - Non-Operating Expenses.

EBT = $54,200 + $1,400 - $15,100 - $20,600 - $2,100

      = $17,800

What is the amount of net income to be reported on ABC Company’s 12/31/X1 income statement?

Net Income = Sales Revenues + Interest Revenue - Cost of Goods Sold - Operating Expenses - Non-Operating Expenses - Tax Expense

We simply substract the Tax Expense ($3,700), from the EBT.

Net Income = $17,800 - $3,700

                   = $14,100

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Answer:

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Option B is the correct answer

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To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) = C

Total periods (n) = 13.5 * 2 = 27

r or YTM = 0.064 * 6/12 = 0.032 or 3.2%

The formula to calculate the price of the bonds today is attached.

We will first calculate the value of semi coupon payment  made by the bond.

1023 = C * [( 1 - (1+0.032)^-27) / 0.032]  + 1000 / (1+0.032)^27

1023 = C * 17.8994796  +  427.2166529

1023 -  427.2166529  =  C * 17.8994796

595.7833471 / 17.8994796  =  C

C = 33.28495355 rounded off to 33.28

The annual coupon payment will be = 33.28495355 * 2 = 66.56990711 rounded off to 66.57

Annual Coupon rate =  66.56990711 / 1000 = 0.06656990711 or 6.656990711% rounded off to 6.66%

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The stockholders’ equity accounts of Martinez Company have the following balances on December 31, 2017. Common stock, $10 par, 3
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Answer:

retained earnings     577,200 debit

   stock dividends payable            577,200 credit

--to record declared stock dividends--

stock dividends payable   577,200 debit

               common stock                156,000 credit

               additional paid-in            421,600 credit

--issued stock dividends--

retained earnings    11,544,000 debit

   stock dividends payable     11,544,000 credit

--to record declared stock dividends--

stock dividends payable   11,544,000 debit

              common stock                      3,120,000 credit

              additional paid-in                 8,424,000 credit

--issued stock dividends--

A 2-for-1 stock split NO ENTRY

Explanation:

<u>Stock dividends of 5%</u>

Shares outstanding 312,000 x 5% x $37 market price

15,600 new shares x $ 37 per share = $ 577,200

First we declare the dividend payable, then we write-off the payable and increase equity.

Common stock for the face value and additional paid-in for the difference:

15,600 x 10 = 156,000

577,200 - 156,000 = 421,600

<u>Stock Dividends of 100%</u>

312,000 x 100% x 37 = 11,544,000

same entries as before but, with difference number

face value 312,000 x 10 = 3,120,000

additional paid-in 8,424,000

<u>A 2-for-1 stock split</u>

No entry is required as the company will have double shares but with halft the value each. It will not effect the total market capitalization.

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