Backus Tractor SalesThe accountant prepared the following list of account balances from the company's records for the year ended December 31, 2019.

Sales Revenue$1,650,000
Cash$300,000
Accounts Receivable140,000
Selling Expenses440,000
Equipment420,000
Common Stock170,000
Accounts Payable120,000
Interest Income30,000
Salaries & Wages Expense400,000
Cost of Sales510,000
Inventories220,000
Prepaid Expenses20,000
Income Taxes Payable50,000
Income Taxes Expense180,000
Notes Payable, due 6/30/2021200,000
Retained Earnings?
Determine the following amounts for Backus Tractor Sales:
A)The total revenues for 2019.  B)The total expenses for 2019.  C)What is the purpose of the Income Statement?  D)Is this company profitable? Explain your answer.  E)Is this the first year of operations for this company? Explain your answer.

What will be an ideal response?

A)$1,680,000 ($1,650,000 Sales Revenue + $30,000 Interest Income = $1,680,000)  B)$1,530,000 ($510,000 Cost of Sales + $400,000 Salaries & Wages Expense + $440,000 Selling Expenses + $180,000 Income Taxes Expense = $1,530,000)  C)The purpose of the Income Statement is to provide information regarding the revenues and expenses of the entity. The difference shows the profitability of the company for a particular period of time.  D)The company had net income for the period of $150,000. Since revenues exceeded expenses for the period, the company would be considered profitable.  E)This would not be the first year of operations for this company. The reasons for this are that the ending Retained Earnings balance is greater than the net income of $150,000. Since the ending balance of Retained Earnings is $560,000, and Net Income for the period was $150,000 as well as apparently no dividends being paid to the stockholders during the year, the company began the year with a balance of $410,000 ($560,000 ? $150,000) in Retained Earnings.

Business

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