Lopez Corporation Began Operations at the Start of 20X3

question 102

Essay

Lopez Corporation began operations at the start of 20X3. During the year, it made cash and credit sales totaling $974,000 and collected $860,000 in cash from its customers. It purchased inventory costing $508,000, paid $25,000 for dividends and the cost of goods sold was $445,000. The corporation incurred the following expenses: Required:
1. Prepare an income statement showing revenues, expenses, pretax profit, income tax expense, and profit for the year ended December 31, 20X3.
2. Based on the above information, what is the amount of trade receivables on the statement of financial position prepared at the end of 20X3?
3. Based on the above information, what is the amount of retained earnings on the statement of financial position prepared at the end of 20X3?

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Definitions:

Simple Interest

A method to calculate interest where the interest payment is a fixed percentage of the principal amount that does not change over the life of the loan or investment.

Interest

Interest is the cost of borrowing money, expressed as a percentage of the borrowed sum, paid by the borrower to the lender for the use of the money over a specified period.

Lump Sum

A one-time transaction executed at a specific moment, rather than multiple transactions spread out over a period.

Rate Of Return

The profit or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.