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Required: a. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2022, and a balance sheet at December 31, 2022, for Breanna Incorporated. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e. b. What is the company's average income tax rate? c. What interest rate is charged on long-term debt? Assume that the year-end balance of long-term debt is representative of the average long-term debt account balance throughout the year. 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 is used for dividends)?

Required: a. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2022, and a balance sheet at December 31, 2022, for Breanna Incorporated. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e. b. What is the company's average income tax rate? c. What interest rate is charged on long-term debt? Assume that the year-end balance of long-term debt is representative of the average long-term debt account balance throughout the year. 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 is used for dividends)?

FINANCIAL ACCOUNTING
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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### Financial Analysis of Breanna Incorporated The following financial information was obtained from the records of Breanna Incorporated for the year ended December 31, 2022: #### Financial Data: - **Accounts Receivable:** $10,120 - **Accumulated Depreciation:** $50,800 - **Cost of Goods Sold:** $128,800 - **Income Tax Expense:** $9,500 - **Cash:** $64,500 - **Net Sales:** $191,000 - **Equipment:** $123,000 - **Selling, General, and Administrative Expenses:** $36,800 - **Common Stock (8,280 shares):** $98,000 - **Accounts Payable:** $12,500 - **Retained Earnings, January 1, 2022:** $32,550 - **Interest Expense:** $5,200 - **Merchandise Inventory:** $38,200 - **Long-Term Debt:** $36,200 - **Dividends Declared and Paid During 2022:** $6,150 **Note:** All balance sheet items reflect account balances as of December 31, 2022, while all income statement items reflect activities for the year ended December 31, 2022. There were no changes in paid-in capital during the year. #### Tasks: 1. **Income Statement and Statement of Changes in Stockholders' Equity:** - Prepare these statements for the year ended December 31, 2022. - Prepare a balance sheet as of December 31, 2022. 2. **Financial Analysis Questions:** a. **Average Income Tax Rate:** - Calculate the company's average income tax rate. b. **Interest Rate on Long-Term Debt:** - Determine the interest rate placed on long-term debt, assuming the year-end balance represents the average long-term debt account balance throughout the year. c. **Par Value per Share of Common Stock:** - Identify the par value per share of common stock. d. **Dividend Policy:** - Determine the proportion of the company's earnings used for dividends. #### Instructions: Complete the required financial statements and answers to the analysis questions by entering your answers in the provided tabs. **Important Notes:** - When preparing the balance sheet, note that decreases are presented in parenthesis to indicate a negative financial statement effect. ### Sample Student
Transcribed Image Text:### Financial Analysis of Breanna Incorporated The following financial information was obtained from the records of Breanna Incorporated for the year ended December 31, 2022: #### Financial Data: - **Accounts Receivable:** $10,120 - **Accumulated Depreciation:** $50,800 - **Cost of Goods Sold:** $128,800 - **Income Tax Expense:** $9,500 - **Cash:** $64,500 - **Net Sales:** $191,000 - **Equipment:** $123,000 - **Selling, General, and Administrative Expenses:** $36,800 - **Common Stock (8,280 shares):** $98,000 - **Accounts Payable:** $12,500 - **Retained Earnings, January 1, 2022:** $32,550 - **Interest Expense:** $5,200 - **Merchandise Inventory:** $38,200 - **Long-Term Debt:** $36,200 - **Dividends Declared and Paid During 2022:** $6,150 **Note:** All balance sheet items reflect account balances as of December 31, 2022, while all income statement items reflect activities for the year ended December 31, 2022. There were no changes in paid-in capital during the year. #### Tasks: 1. **Income Statement and Statement of Changes in Stockholders' Equity:** - Prepare these statements for the year ended December 31, 2022. - Prepare a balance sheet as of December 31, 2022. 2. **Financial Analysis Questions:** a. **Average Income Tax Rate:** - Calculate the company's average income tax rate. b. **Interest Rate on Long-Term Debt:** - Determine the interest rate placed on long-term debt, assuming the year-end balance represents the average long-term debt account balance throughout the year. c. **Par Value per Share of Common Stock:** - Identify the par value per share of common stock. d. **Dividend Policy:** - Determine the proportion of the company's earnings used for dividends. #### Instructions: Complete the required financial statements and answers to the analysis questions by entering your answers in the provided tabs. **Important Notes:** - When preparing the balance sheet, note that decreases are presented in parenthesis to indicate a negative financial statement effect. ### Sample Student
**Balance Sheet Preparation Template: Breanna Incorporated** **Instructions:** Prepare a balance sheet as of December 31, 2022, for Breanna Incorporated. Note: Enter decreases with a minus sign to indicate a negative financial statement effect. --- **BREANNA INCORPORATED** **Balance Sheet** **December 31, 2022** --- ### **Assets** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | - | | | | Total current assets | | | | - | | | | - | | | | - | | | | Total assets | | | ### **Liabilities** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | Total liabilities | | | ### **Stockholders' Equity** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | Total stockholders' equity | | | --- **Total liabilities and stockholders' equity:** --- Below the balance sheet are two navigation buttons that read as follows: - **Req A2** - **Req B to E** This template helps ensure that all necessary financial sections and calculations are completed accurately. The total assets should equal the total liabilities and stockholders' equity, following the fundamental accounting equation: \[ \text{Assets} = \text{Liabilities} + \text{Stockholders' Equity} \]
Transcribed Image Text:**Balance Sheet Preparation Template: Breanna Incorporated** **Instructions:** Prepare a balance sheet as of December 31, 2022, for Breanna Incorporated. Note: Enter decreases with a minus sign to indicate a negative financial statement effect. --- **BREANNA INCORPORATED** **Balance Sheet** **December 31, 2022** --- ### **Assets** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | - | | | | Total current assets | | | | - | | | | - | | | | - | | | | Total assets | | | ### **Liabilities** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | Total liabilities | | | ### **Stockholders' Equity** | Description | Amount | Total | |------------------------------|-------------|-------| | - | | | | - | | | | - | | | | - | | | | Total stockholders' equity | | | --- **Total liabilities and stockholders' equity:** --- Below the balance sheet are two navigation buttons that read as follows: - **Req A2** - **Req B to E** This template helps ensure that all necessary financial sections and calculations are completed accurately. The total assets should equal the total liabilities and stockholders' equity, following the fundamental accounting equation: \[ \text{Assets} = \text{Liabilities} + \text{Stockholders' Equity} \]
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