Question

(Reviewing financial statements) Prepare a balance sheet and income statement for TNT, Inc., from the following scrambled list of items:

Depreciation expense $ 99,000 Cash 337,500 Long-term debt 501,000 Sales 859,500 Accounts payable 153,000 General and administrative expense 118,500 Buildings and equipment 1,342,500 Notes payable 113,850 Accounts receivable 251,250 Interest expense 7,125 Accrued expenses 11,850 Common stock 433,500 Cost of goods sold 445,500 Inventory 148,950 Taxes 75,750 Accumulated depreciation 394,500 Taxes payable 79,500 Retained earnings 393,000

(A) Prepare an income statement for TNT.

(B) Prepare a balance sheet for TNT.

(C) What can you say about the firm’s financial condition based on these financial statements?

Answer 1

(A) Income Statement of TNT Inc

Particulars	Amount	Amount
Sales		$ 859,500
Cost of Goods Sold		$ 445,500
Gross Profit		$ 414,000
Depreciation	$ 99,000
General& administrative expense	$ 118,500
Interest Expense	$     7,125
Total Expenses		$ 224,625
Operating income		$ 189,375
Taxes		$   75,750
Net Income		$ 113,625

(B) Balance Sheet for TNT

Cash	$ 337500
Accounts Receivable	$ 251250
Inventory	$ 148950
Total Current Assets		$ 737700
Building and Equipment	$1342500
Accumulated depreciation	$ 394500
Total Non-Current Assets		$ 948000
Total Assets		$ 1685700
Notes Payable	$ 113850
Accounts Payable	$ 153000
Taxes Payable	$   79500
Accrued Expenses	$   11850
Total Current Liabilities		$ 358200
Long -Term Debt	$ 501000
Total Long Term Debt		$ 501000
Total Liabilities		$ 859200
Common Stock	$ 433500
Retained Earnings	$ 393000
Total Shareholder’s Equity		$ 826500
Total Liabilities and Shareholder’s Equity		$ 1685700

(C ) TNT Inc was profitable during the year. Current assets were capable of meeting the current liabilities.