Rudy Gandolfi owns and operates Rudy’s Furniture Emporium Inc. The

Rudy Gandolfi owns and operates Rudy’s Furniture Emporium Inc. The totals for assets, liabilities, and stockholders’ equity at August 1, 2019, are as indicated. Described here are several transactions entered into by the company throughout the month of August.

Required:

a. Indicate the amount and effect (+ or −) of each transaction on total assets, total liabilities, and total stockholders’ equity, and then compute the new totals for each category. The first transaction is provided as an illustration.

b. What was the amount of net income (or loss) during August? How much were total revenues and total expenses during August?

c. What were the net changes during the month of August in total assets, total liabilities, and total stockholders’ equity?

d. Explain to Rudy Gandolfi which transactions caused the net change in his stockholders’ equity during August.

e. Explain why dividend payments are not an expense, but interest is an expense.

f. Explain why the money borrowed from the bank increased assets but did not increase net income.

g. Explain why paying off accounts payable and collecting accounts receivable do not affect net income.

The following information was obtainedfrom the records of Shae Inc.:Merchandise

The following information was obtained
from the records of Shae Inc.:

Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,000
Notes payable (long-term) . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 168,000
Selling, general, and administrative expenses . . . . . . . . . 24,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Common stock (14,000 shares) . . . . . . . . . . . . . . . . . . . . . 70,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,000
Retained earnings, 1∕1∕19 . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Dividends declared and paid during 2019 . . . . . . . . . … . 13,000

Except as otherwise indicated, assume that all items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year ended December 31, 2019. There were no changes in paid-in capital during the year.

Required:

a. Prepare an income statement and statement of changes in stockholders’ equity for the year ended December 31, 2019, and a at December 31, 2019, for Shae Inc. Based on the that you have prepared for part a, answer the questions in parts b–e. Provide brief explanations for each of your answers and state any assumptions you believe are necessary to ensure that your answers are correct.

b. What is the company’s average income tax rate?

c. What interest rate is charged on long-term debt?

d. What is the per share of common stock?

e. What is the company’s policy (i.e., what proportion of the company’s earnings is used for dividends)?

The information on the following page was obtained from the

The information on the following page was obtained from the records of Breanna Inc.:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,000
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 208,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,000
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
Selling, general, and administrative expenses . . . . . . . . . 136,000
Common stock (36,000 shares) . . . . . . . . . . . . . . . . . . . . . 360,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Retained earnings, 1/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . 92,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,000
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Dividends declared and paid during 2019 . . . . . . . . . . . . 48,000

Except as otherwise indicated, assume that all items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year ended December 31, 2019. There were no changes in paid-in capital during the year.

Required:

a. Prepare an income statement and statement of changes in stockholders’ equity for the year ended December 31, 2019, and a at December 31, 2019, for Breanna Inc. Based on the that you have prepared for part a, answer the questions in parts b–e. Provide brief explanations for each of your answers and state any assumptions you believe are necessary to ensure that your answers are correct.

b. What is the company’s average income tax rate?

c. What interest rate is charged on long-term debt?

d. What is the per share of common stock?

e. What is the company’s policy (i.e., what proportion of the company’s earnings are used for dividends)?

Gary’s TV had the following accounts and amounts in its

Gary’s TV had the following accounts and amounts in its on December 31, 2019. Assume that all items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year then ended.

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,500
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Notes payable (long-term) . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Merchandise inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,000
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000

Required:

a. Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2019.

b. Calculate the total assets at December 31, 2019.

c. Calculate the earnings from operations (operating income) for the year ended December 31, 2019.

d. Calculate the net income (or loss) for the year ended December 31, 2019.

e. What was the average income tax rate for Gary’s TV for 2019?

f. If $32,000 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings?

Following is a partially completed balance sheet for Epsico Inc.

Following is a partially completed balance sheet for Epsico Inc. at December 31, 2019, together with comparative data for the year ended December 31, 2018. From the statement of cash flows for the year ended December 31, 2019, you determine the following (amounts in thousands of dollars):

Net income for the year ended December 31, 2019, was $312.

Dividends paid during the year ended December 31, 2019, were $96.

Cash increased $96 during the year ended December 31, 2019.

The cost of new equipment acquired during 2019 was $180; no equipment was disposed of.

There were no transactions affecting the land account during 2019, but it is estimated that the fair market value of the land at December 31, 2019, is $480.

Required:

Complete the balance sheet at December 31, 2019.

From the following data, calculate the retained earningsbalance as of

From the following data, calculate the retained earnings
balance as of December 31, 2018:

Retained earnings, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $630,900
Decrease in total liabilities during 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,400
Gain on the sale of buildings during 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,300
Dividends declared and paid in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,500
Proceeds from sale of in 2019 . . . . . . . . . . . . . . . . . . . . . . . . 148,200
Net income for the year ended December 31, 2019 . . . . . . . . . . . . . . . . . . 67,800

At the beginning of the current fiscal year, the balance

At the beginning of the current fiscal year, the for Davis Co. showed liabilities of $160,000. During the year, liabilities decreased by $9,000, assets increased by $33,000, and paidin capital increased from $15,000 to $96,000. Dividends declared and paid during the year were $12,000. At the end of the year, stockholders’ equity totaled $215,000.

Required:

Calculate net income (or loss) for the year. Set up an accounting equation for the beginning of the year, changes during the year, and at the end of the year. Enter known data and solve for the unknowns. Remember, net income [or loss] may not be the only item affecting retained earnings.

You have accumulated $25,000 and are looking for the best

You have accumulated $25,000 and are looking for the best rate of return that can be earned over the next year. A bank savings account will pay 3%. A one-year bank certificate of deposit will pay 6%, but the minimum investment is $30,000.

Required:

a. Calculate the amount of return you would earn if the $25,000 were invested for one year at 3%.

b. Calculate the net amount of return you would earn if $5,000 were borrowed at a cost of 12%, and then $30,000 were invested for one year at 6%.

c. Calculate the net rate of return on your investment of $25,000 if you accept the strategy of part b.

d. In addition to the amount of investment required and the rate of return offered, what other factors would you normally consider before making an investment decision such as the one described in this exercise?

A friend has $5,000 that he has saved from his

A friend has $5,000 that he has saved from his part-time job. He will need his money, plus any interest earned on it, in six months and has asked for your help in deciding whether to put the money in a bank savings account at 3% interest or to lend it to Victor. Victor has promised to repay $5,300 after six months.

Required:

a. Calculate the interest earned on the savings account for six months.

b. Calculate the rate of return if the money is lent to Victor. Round your percentage answer to two decimal places.

c. Which alternative would you recommend? Explain your answer.

Selected data from the September 30, 2017, and September 24,

Selected data from the September 30, 2017, and September 24, 2016, consolidated balance sheets and income statements for the years then ended for Apple Inc. follow. All amounts are reported in millions.

Required:

a. Calculate the amount of Apple’s gross profit for each year. Has gross profit as a percentage of sales changed significantly during the past year?

b. Calculate the amount of Apple’s operating income for each year. Has operating income as a percentage of sales changed significantly during the past year?

c. After completing parts a and b, calculate the other missing amounts for each year.