Question

Can anyone help me with an accounting question?

Answer 1

Presented below are the financial statements of Weller Company.

WELLER COMPANY
Comparative Balance Sheets
December 31

Assets 2008
2007

Cash $ 35,000 $ 20,000
Accounts receivable 33,000 14,000
Merchandise inventory 27,000 20,000
Property, Plant and Equipment 60,000 78,000
Accumulated depreciation (29,000)
(24,000)

Total $126,000
$108,000


Liabilities and Stockholders' Equity
Accounts payable $ 29,000 $ 15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings 45,000
38,000

Total $126,000
$108,000




WELLER COMPANY
Income Statement
For the Year Ended December 31, 2008

Sales $242,000
Cost of goods sold 175,000

Gross profit 67,000
Selling expenses $18,000
Administrative expenses 6,000
24,000

Income from operations 43,000
Interest expense 3,000

Income before income taxes 40,000
Income tax expense 8,000

Net income $ 32,000



Additional data:

Dividends declared and paid were $25,000.

During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.

All depreciation expense, $14,500, is in the selling expense category.

All sales and purchases are on account.