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    Financial Statement Relationships

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    Interest expense $18,000
    Paid-in capital $40,000
    Accumulated depreciation $12,000
    Notes payable (long term) $140,000
    Rent expense $36,000
    Merchandise inventory $420,000
    Accounts receivable $96,000
    Depreciation expense $6,000
    Land $64,000
    Retained earnings $450,000
    Cash $72,000
    Cost of goods sold $880,000
    Equipment $36,000
    Income tax expense $120,000
    Accounts payable $46,000
    Sales revenue $1,240,000

    a. Calculate the difference between current assets and current liabilities at December 31, 2007.
    b. Calculate the total assets at December 31, 2007.
    c. Calculate the earnings from operations (operating income) for the year ended December 31, 2007.
    d. Calculate the net income (or loss) for the year ended December 31, 2007.
    e. What was the average income tax rate for 2007?
    f. If $128,000 of dividends had been declared and paid during the year, what was the January 1, 2007 balance of retained earnings?

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    Solution Summary

    This solution evaluates a financial statement, addressing current assets and liabilities, total assets, earning and dividends.