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    Guidelines On Estate and Donor S Tax

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    Geraldo Mejillano
    Beer and Donuts Corporation's balance sheet shows total assets of $2.1 million in Year 2, up slightly from $2.04 million in Year 1. Total liabilities were $930,000 in Year 2, also up slightly from $910,000 in Year 1. Net income for Year 2 was $122,000 according to the income statement.

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    Guidelines On Estate and Donor S Tax

    Uploaded by

    Geraldo Mejillano
    27 views2 pages
    Beer and Donuts Corporation's balance sheet shows total assets of $2.1 million in Year 2, up slightly from $2.04 million in Year 1. Total liabilities were $930,000 in Year 2, also up slightly from $910,000 in Year 1. Net income for Year 2 was $122,000 according to the income statement.

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    Beer and Doughnuts

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    Guidelines on Estate and Donor s Tax

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    Beer and Donuts Corporation's balance sheet shows total assets of $2.1 million in Year 2, up slightly from $2.04 million in Year 1. Total liabilities were $930,000 in Year 2, also up slightly from $910,000 in Year 1. Net income for Year 2 was $122,000 according to the income statement.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Guidelines On Estate and Donor S Tax

    Uploaded by

    Geraldo Mejillano
    Beer and Donuts Corporation's balance sheet shows total assets of $2.1 million in Year 2, up slightly from $2.04 million in Year 1. Total liabilities were $930,000 in Year 2, also up slightly from $910,000 in Year 1. Net income for Year 2 was $122,000 according to the income statement.

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    Beer and Donuts Corporation's most recent balance sheet and income statement appear below:

    Statement of Financial Position


    December 31, Year 2 and Year 1
    (in thousands of dollars)
    Year 2 Year 1
    Assets
    Current assets:
    Cash ................................................................... $ 520 $ 440
    Accounts receivable .......................................... 410 380
    Inventory ........................................................... 290 280
    Prepaid expenses ............................................... 20 20
    Total current assets ............................................... 1,240 1,120
    Plant and equipment, net ...................................... 860 920
    Total assets ........................................................... $2,100 $2,040

    Liabilities and Stockholders’ Equity


    Current liabilities:
    Accounts payable .............................................. $ 290 $ 280
    Accrued liabilities ............................................. 180 180
    Notes payable, short term .................................. 100 100
    Total current liabilities ......................................... 570 560
    Bonds payable ...................................................... 360 350
    Total liabilities ...................................................... 930 910
    Stockholders’ equity:
    Preferred stock, $100 par value, 5% ................. 250 250
    Common stock, $1 par value ............................. 150 150
    Additional paid-in capital–common stock ........ 200 200
    Retained earnings .............................................. 570 530
    Total stockholders’ equity .................................... 1,170 1,130
    Total liabilities & stockholders’ equity ................ $2,100 $2,040
    Income Statement
    For the Year Ended December 31, Year 2
    (in thousands of dollars)
    Sales (all on account) ........................................... $1,540
    Cost of goods sold ................................................ 1,250
    Gross margin ........................................................ 290
    Selling and administrative expense ...................... 80
    Net operating income ........................................... 210
    Interest expense .................................................... 35
    Net income before taxes ....................................... 175
    Income taxes (30%) .............................................. 53
    Net income ........................................................... $ 122

    Dividends on common stock during Year 2 totaled $50 thousand. Dividends on preferred
    stock totaled $8 thousand. The market price of common stock at the end of Year 2 was
    $17 per share.

    Accounts receivable turnover = Sales on account ÷ Average accounts receivable* =


    *Average accounts receivable =

    Average collection period = 365 days ÷ Accounts receivable turnover (see above) =

    Inventory turnover = Cost of goods sold ÷ Average inventory* =


    *Average inventory =

    Average sale period = 365 days ÷ Inventory turnover (see above) =

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