**Completing the Financial Statements for Breanna Incorporated**This section provides a step-by-step guide for students to complete an income statement for Breanna Incorporated, for the year ended December 31, 2022. This exercise is designed to help students understand the components and preparation of an income statement.### Steps to Prepare the Income Statement1. **Enter the Company Information:** - The heading should include the company name (Breanna Incorporated), the statement name (Income Statement), and the specific period the statement covers (For the Year Ended December 31, 2022).2. **Input Revenue Figures:** - Students need to enter total revenue for the year at the top of the statement. This figure represents all income earned by Breanna Incorporated from its business activities over the specified period.3. **Enter Expenses:** - Under the revenue section, list all expenses incurred during the year. Expenses should be detailed under appropriate categories such as cost of goods sold, administrative expenses, selling expenses, etc.4. **Calculate Operating Income:** - Subtract total expenses from total revenue to derive the operating income for the year. This figure indicates the company’s profitability from normal business operations.5. **Adjust for Other Income and Expenses:** - Add any other sources of income that are not part of primary business operations (e.g., interest income). Also, subtract any other expenses or losses incurred.6. **Compute Net Income:** - Sum all operating income and other income, then subtract other expenses to reach the net income figure. This value represents the company’s overall profitability for the year.### Detailed Breakdown of Each Line Item- **Total Revenue**: This field captures the sum of all sales or services provided by the company.- **Cost of Goods Sold (COGS)**: Reflects the direct costs attributable to the production of goods sold by the company.- **Gross Profit**: Calculated as Total Revenue minus COGS.- **Operating Expenses**: Includes categories such as administrative expenses, marketing costs, etc.- **Operating Income**: Determined by subtracting Operating Expenses from Gross Profit.- **Other Income/Expenses**: Any additional income or losses that are not part of operational activities.- **Net Income**: The final figure, calculated as Operating Income plus Other Income minus Other Expenses.### Graphs or DiagramsIn this exercise template, no actual figures or graphs are provided. ---### Financial Analysis: Breanna Incorporated#### Financial Data SummaryThe information on the following page was obtained from the records of Breanna Incorporated:- **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:** $36,000- **Common stock (8,200 shares):** $98,000- **Accounts payable:** $12,500- **Retained earnings, 1/1/22:** $32,550- **Interest expense:** $5,200- **Merchandise inventory:** $38,200- **Long-term debt:** $36,200- **Dividends declared and paid during 2022:** $6,150**Note:** Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2022, and that all income statement items reflect activities that occurred during the year ended December 31, 2022. There were no changes in paid-in capital during the year.#### Required Analysis**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)?#### Instructions**Complete the question by entering your answers in the tabs below.**- Req A1- Req A2- Req A3- Req B to E---**Prompt:** Prepare a balance sheet at December 31, 2022, for Breanna Incorporated.

The Income statement is one of the financial statements which determines the profit or loss of the…

The information on the following page was obtained from the records of Breanna Incorporated: Accounts receivable Accumulated depreciation $ 10, 200 50,800 Cost of goods sold 128,000 Income tax expense Cash 9,500 64,500 Net sales 191,000 123,000 Equipment Selling, general, and administrative expenses Common stock (8,200 shares) Accounts payable Retained earnings, 1/1/22 Interest expense Merchandise inventory Long-term debt Dividends declared and paid during 2022 36,000 98,000 12,500 32,550 5,200 38,300 36,000 6,150 Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2022, and that all income statement items reflect activities that occurred during the year ended December 31, 2022. 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, 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)? Complete this question by entering your answers in the tabs below. Req B to E Req A1 Reg A2 Req A3 Prepare a balance sheet at December 31, 2022, for Breanna Incorporated. Note: Enter decreases with a minus sign to indicate a negative financial statement effect. BREANNA INCORPORATED

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q