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    Analyzing financial statements - Gary TV

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    Gary's TV had the following accounts and amounts in its financial statements on December 31, 2010. 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 then ended.

    Interest expense............................. 36,000
    Paid in capital................................... 80,000
    Accumulated depreciation.................. 24,000
    Notes payable (long-term).............. 280,000
    Rent expense.................................. 72,000
    Merchandise inventory..................... 840,000
    Accounts receivable......................... 192,000
    Depreciation expense...................... 12,000
    Land................................................. 128,000
    Retained earnings............................ 900,000
    cash................................................. 144,000
    Cost of goods sold........................ 1,760,000
    Equipment........................................ 72,000
    Income tax expense........................ 240,000
    Accounts payable............................ 92,000
    Sales revenue............................ 2,480,000

    Required:

    a. Calculate the difference between current assets and current liabilities for Gary's TV at December 31, 2010.
    b. Calculate the total assets at December 31, 2010.
    c. Calculate the earnings from operations (operating income) for the year ended December 31, 2010.
    d. Calculate the net income (or loss) for the year ended December 31, 2010.
    e. What was the average income tax rate for Gary's TV for 2010?
    f. If $256,000 of dividends had been declared and paid during the year, what was the January 1, 2010, balance of retained earnings?

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    Solution Summary

    The solution calculates Calculate the difference between current assets and current liabilities,the total assets,the earnings from operations (operating income), the net income (or loss), the average income tax rate and If $256,000 of dividends had been declared and paid during the year, what was the January 1, 2010, balance of retained earnings for Gary's TV

    $2.19

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