d. Suppose that sales were $425,000 in 2020 rather than $412,500. What is the 2020 net income and retained earnings?e. Undo the changes from part d, and change the tax rate to 20%. What is the 2020 net income and retained earnings? AssetsCashBig Rock Candy Mountain Mining Co.Balance SheetFor the Year Ended December 31, 20202020Marketable SecuritiesAccounts ReceivableInventoryTotal Current AssetsGross Fixed AssetsAccumulated DepreciationNet Plant & EquipmentTotal AssetsLiabilities & Owner's EquityAccounts PayableAccrued ExpensesTotal Current LiabilitiesLong-term DebtTotal LiabilitiesCommon Stock ($1.00 par)Additional Paid-in-CapitalRetained EarningsTotal Owner's EquityTotal Liab. & Owner's Equity$16,4353,65645,89652,397118,384436,57387,450349,123467,507$37,7523,18340,935170,562211,49758,664136,80760,539256,010467,5072019$11,59661947,40454,599114,218397,02357,650339,373453,591$36,8193,08539,904178,581218,48558,664136,80739,635235,106453,591 PROBLEMS1. Using the data presented below:SalesCost of GoodsGross ProfitBig Rock Candy Mountain Mining Co.Income StatementsFor the Years 2019 and 20202020$412,500318,78693,71429,80026,250DepreciationSelling & Admin. ExpenseOther Operating ExpenseNet Operating IncomeInterest ExpenseEarnings Before TaxesTaxesNet IncomeNotes:Tax RateSharesEarnings per Share1,21036,4548,58227,8726,96820,90425.00%52,100$0.402019$398,600315,30083,30029,65224,5501,24527,8538,45719,3964,84914,54725.00%52,100$0.28

2020Sales 425000Cost of goods sold 328446.2Gross Profit96553.82Depreciation29800Selling & Admin…

Answered: Net Income 20,904 14,547

Business

Accounting

Net Income 20,904 14,547

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

d. Suppose that sales were $425,000 in 2020 rather than $412,500. What is the 2020 net income and retained earnings?

e. Undo the changes from part d, and change the tax rate to 20%. What is the 2020 net income and retained earnings?

Assets
Cash
Big Rock Candy Mountain Mining Co.
Balance Sheet
For the Year Ended December 31, 2020
2020
Marketable Securities
Accounts Receivable
Inventory
Total Current Assets
Gross Fixed Assets
Accumulated Depreciation
Net Plant & Equipment
Total Assets
Liabilities & Owner's Equity
Accounts Payable
Accrued Expenses
Total Current Liabilities
Long-term Debt
Total Liabilities
Common Stock ($1.00 par)
Additional Paid-in-Capital
Retained Earnings
Total Owner's Equity
Total Liab. & Owner's Equity
$16,435
3,656
45,896
52,397
118,384
436,573
87,450
349,123
467,507
$37,752
3,183
40,935
170,562
211,497
58,664
136,807
60,539
256,010
467,507
2019
$11,596
619
47,404
54,599
114,218
397,023
57,650
339,373
453,591
$36,819
3,085
39,904
178,581
218,485
58,664
136,807
39,635
235,106
453,591

PROBLEMS
1. Using the data presented below:
Sales
Cost of Goods
Gross Profit
Big Rock Candy Mountain Mining Co.
Income Statements
For the Years 2019 and 2020
2020
$412,500
318,786
93,714
29,800
26,250
Depreciation
Selling & Admin. Expense
Other Operating Expense
Net Operating Income
Interest Expense
Earnings Before Taxes
Taxes
Net Income
Notes:
Tax Rate
Shares
Earnings per Share
1,210
36,454
8,582
27,872
6,968
20,904
25.00%
52,100
$0.40
2019
$398,600
315,300
83,300
29,652
24,550
1,245
27,853
8,457
19,396
4,849
14,547
25.00%
52,100
$0.28

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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