Answer :
Certainly! Let's break down the information provided in the income statement and the balance sheets to ensure we understand how Rewe Company's financial performance and changes in key accounts over the year.
### Income Statement Analysis
The income statement for Rewe Company for the year ended December 31, 2022, provides crucial financial information as summarized below:
1. Service Revenue:
- Total revenue earned from services: [tex]\( \$970,000 \)[/tex]
2. Operating Expenses (excluding depreciation):
- Total operating expenses: [tex]\( \$614,000 \)[/tex]
3. Depreciation Expense:
- Depreciation expense for the year: [tex]\( \$55,000 \)[/tex]
4. Loss on Disposal of Plant Assets:
- Loss incurred from disposing of plant assets: [tex]\( \$16,000 \)[/tex]
- Total operating expenses (exclusive of income tax expense): [tex]\( \$614,000 + \$55,000 + \$16,000 = \$685,000 \)[/tex]
5. Income Before Income Taxes:
- Revenue less total operating expenses: [tex]\( \$970,000 - \$685,000 = \$285,000 \)[/tex]
6. Income Tax Expense:
- Tax on the income before taxes: [tex]\( \$56,000 \)[/tex]
7. Net Income:
- Income after deducting income tax: [tex]\( \$285,000 - \$56,000 = \$229,000 \)[/tex]
### Balance Sheet Comparative Data
The balance sheet provides comparative data for specific accounts at the beginning and the end of the year:
1. Accounts Receivable:
- Beginning balance: [tex]\( \$70,000 \)[/tex]
- Ending balance: [tex]\( \$60,000 \)[/tex]
- Decrease in accounts receivable: [tex]\( \$70,000 - \$60,000 = \$10,000 \)[/tex]
2. Accounts Payable:
- Beginning balance: [tex]\( \$41,000 \)[/tex]
- Ending balance: [tex]\( \$32,000 \)[/tex]
- Decrease in accounts payable: [tex]\( \$41,000 - \$32,000 = \$9,000 \)[/tex]
3. Income Taxes Payable:
- Beginning balance: [tex]\( \$13,000 \)[/tex]
- Ending balance: [tex]\( \$7,000 \)[/tex]
- Decrease in income taxes payable: [tex]\( \$13,000 - \$7,000 = \$6,000 \)[/tex]
### Summary
- Rewe Company generated [tex]\( \$970,000 \)[/tex] from service revenues.
- Their total operating expenses (excluding depreciation and loss on disposal) were [tex]\( \$614,000 \)[/tex].
- Including depreciation (\[tex]$55,000) and loss on disposal of plant assets (\$[/tex]16,000), total operating expenses amounted to [tex]\( \$685,000 \)[/tex].
- After accounting for these expenses, the income before taxes was [tex]\( \$285,000 \)[/tex].
- Deducting the income tax expense (\[tex]$56,000), the net income for the year was \( \$[/tex]229,000 \).
In terms of changes in the company's operational accounts over the year:
- Accounts receivable decreased by [tex]\( \$10,000 \)[/tex].
- Accounts payable decreased by [tex]\( \$9,000 \)[/tex].
- Income taxes payable decreased by [tex]\( \$6,000 \)[/tex].
This detailed breakdown provides a clear understanding of both the income and financial position changes for Rewe Company over the year.
### Income Statement Analysis
The income statement for Rewe Company for the year ended December 31, 2022, provides crucial financial information as summarized below:
1. Service Revenue:
- Total revenue earned from services: [tex]\( \$970,000 \)[/tex]
2. Operating Expenses (excluding depreciation):
- Total operating expenses: [tex]\( \$614,000 \)[/tex]
3. Depreciation Expense:
- Depreciation expense for the year: [tex]\( \$55,000 \)[/tex]
4. Loss on Disposal of Plant Assets:
- Loss incurred from disposing of plant assets: [tex]\( \$16,000 \)[/tex]
- Total operating expenses (exclusive of income tax expense): [tex]\( \$614,000 + \$55,000 + \$16,000 = \$685,000 \)[/tex]
5. Income Before Income Taxes:
- Revenue less total operating expenses: [tex]\( \$970,000 - \$685,000 = \$285,000 \)[/tex]
6. Income Tax Expense:
- Tax on the income before taxes: [tex]\( \$56,000 \)[/tex]
7. Net Income:
- Income after deducting income tax: [tex]\( \$285,000 - \$56,000 = \$229,000 \)[/tex]
### Balance Sheet Comparative Data
The balance sheet provides comparative data for specific accounts at the beginning and the end of the year:
1. Accounts Receivable:
- Beginning balance: [tex]\( \$70,000 \)[/tex]
- Ending balance: [tex]\( \$60,000 \)[/tex]
- Decrease in accounts receivable: [tex]\( \$70,000 - \$60,000 = \$10,000 \)[/tex]
2. Accounts Payable:
- Beginning balance: [tex]\( \$41,000 \)[/tex]
- Ending balance: [tex]\( \$32,000 \)[/tex]
- Decrease in accounts payable: [tex]\( \$41,000 - \$32,000 = \$9,000 \)[/tex]
3. Income Taxes Payable:
- Beginning balance: [tex]\( \$13,000 \)[/tex]
- Ending balance: [tex]\( \$7,000 \)[/tex]
- Decrease in income taxes payable: [tex]\( \$13,000 - \$7,000 = \$6,000 \)[/tex]
### Summary
- Rewe Company generated [tex]\( \$970,000 \)[/tex] from service revenues.
- Their total operating expenses (excluding depreciation and loss on disposal) were [tex]\( \$614,000 \)[/tex].
- Including depreciation (\[tex]$55,000) and loss on disposal of plant assets (\$[/tex]16,000), total operating expenses amounted to [tex]\( \$685,000 \)[/tex].
- After accounting for these expenses, the income before taxes was [tex]\( \$285,000 \)[/tex].
- Deducting the income tax expense (\[tex]$56,000), the net income for the year was \( \$[/tex]229,000 \).
In terms of changes in the company's operational accounts over the year:
- Accounts receivable decreased by [tex]\( \$10,000 \)[/tex].
- Accounts payable decreased by [tex]\( \$9,000 \)[/tex].
- Income taxes payable decreased by [tex]\( \$6,000 \)[/tex].
This detailed breakdown provides a clear understanding of both the income and financial position changes for Rewe Company over the year.
