Generally Accepted Accounting Principles and Net Income

1. Arredondo, Inc. has current assets of $2,170, net fixed assets of $9300, current liabilities of $1350, and long-term debt of $3980. Building a balance sheet for this company, address the following questions:
a. What is the value of the shareholders’ equity account for this firm?
b. How much is net working capital? Arredondo,IncBalance Sheet | Assets Liabilities and Owener`s EquityCurrent assets $2,170 Current liabilities $1350Net fixed assets $9,300 Long-term debt $3980 Shareholders` equity $6140Total assets $11470 Total liabilities and shareholders` equity $11470 |

Net working capital= $2170-1350=$820

2. Lifeline, Inc. has sales of $585,000, costs of $273,000, depreciation expense of $71,000, interest expense of $38,000, and a tax rate of 35 percent. Building an income statement for this company, what is the net income? Lifeline, IncIncome Statement | Net sales $585,000 Cost $273,000-------------------------------------------------
Depreciation $71,000Earnings before interest and taxes $241,000-------------------------------------------------
Interest paid $38,000Taxable income $203000Taxes $71050Net income $131950 |

3. The SGS Co. had $275,000 in taxable income. Using the rates from Table 2.3 in the chapter, address the following: a. What is the company’s income taxes?
b. What is the company’s average tax rate?
c. What is the