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Question # 2 Several accounts and amounts from the financial statements of Fig Computers Co. (FCC)...

Question # 2

Several accounts and amounts from the financial statements of Fig Computers Co. (FCC) appear below for the year ending December 31, 2015.

Cash                                       $ 10,000          Sales Revenue                       $140,000                        

Cost of goods sold                                60,000           Inventory                                    21,000            

Taxes Payable                            31,000          Selling & Adm Expense                7,000                            

Accounts Receivable              32,000          Dividends declared & paid          42,000      

Equipment                              150,000          Accounts Payable                          9,000                  

Utilities expenses                       3,000        Retained Earnings, Jan. 1, 15      40,000      

Allowance for bad debt               4,000          Income Tax Expense                     2,000

Prepaid Insurance expenses         2,000          Unearned revenues                        3,500

Bad Debt Expense                       1,500          Accumulated Depreciation          12,000

Required: Answer the following questions about Fig Computers Co.

  1. Calculate net income for FCC for the year ended Dec. 31, 2015. Determine the retained earnings at the end of 2015.
  2. Determine the total current assets as of Dec. 31, 2015.
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Homework Answers

Answer #1

Gross profit=sales revenue - cost of goods sold

=140000-60000

=80000 ---------a

in order to calculate the net income , we need to subtract all the indirect expenses

Expenses

utility expenses=3000

allowance for bad debt =4000

selling and administration expenses=7000

accumulated expenses =12000

income tax =2000

Total expenses =28000 --------b

Net income = gross profit - net expenses

=80000-28000

=52000

(b) retained earnings as on 1st jan 2015 40000

net income = 52000

Less dividend declared and paid = 42000

Retained earnings as on 31 st dec 2015 is 50000

(c) current assets would be =inventory + prepaid expenses +accounts receivable+unearned revenues

=21000+2000+32000+3500

=58500

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