Reference no: EM131747626
Ok. I am in this online accounting class and it is the first week and my head is spinning. This is a loaded question so I just figured I would give it a try on here.
The info on the following page was obtained from the records of Breana, Inc.
Accounts receivable = $40,000
Accumulated depreciation = 208,000
Costs of goods sold = 512,000
Income tax expense = 32,000
Cash = 260,000
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 1/1/16 = 92,000
Interest expense = 24,000
Merchandise inventory = 148,000
Long term debt = 160,000
Divedends declared and paid during 2016 = 48,000
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. 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, 2016 and a balance sheet at December 31, 2016 for Breana, Inc.
Based on the financial statements that you have prepared for part a, answers 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 par value per share of common stock?
e. What is the company's dividend policy (i.e., what proportion of the company's earnings are used for dividends)?