Prepare an income statement using the information given below. Make sure to identify gross profit, operating income, and net income.

 

Inventories	$50,000
Cost of Goods Sold	$250,000
Administrative Expenses	$50,000
Accumulated Depreciation	$150,000
Sales	$600,000
Depreciation Expense	$25,000
Selling Expenses	$150,000
Common Stock Dividends	$8,000
Interest Expense	$8,000
Corporate Tax Rate	40%

2) How do gross profits, operating income, and net income relate to the areas of business activity reported in the income statement?

3) Prepare a balance sheet using the information given below. Make sure to identify current assets, net fixed assets, total assets, current liabilities, long-term debt, total equity, and total liabilities and equity.

Gross fixed assets	$40,000
Cash	$18,000
Other assets	$5,000
Accumulated depreciation	$30,000
Common stock	$43,000
Short-term notes payable	$12,000
Accounts payable	$35,000
Inventories	$122,000
Retained earnings	$100,000
Accounts receivable	$60,000
Long-term notes payable	$10,000
Long-term bonds payable	$15,000
Sales	$300,000
Cost of goods sold	$150,000
Depreciation expense	$3,000

4) Table

Marlett Company

Financial Information

	December 2009	December 2010
Net Income	$2,000	$4,000
Accounts receivable	750	1,250
Accumulated depreciation	1,000	1,400
Common stock	4,500	5500
Paid-in capital	7,500	8500
Retained earnings	1,500	3,500
Accounts payable	750	950

Based on the information in Table 3-3, prepare a statement of cash flows for 2010. Assume that there were no changes in any other asset or liability accounts, and that the ending cash balance for 2009 was $100.

5) Mr. Wizard's Magic Shoppe had the following condensed balance sheet at the end of operation for 2010:

Mr. Wizard's Magic Shoppe

Balance Sheet

December 31, 2010

Cash	$40,000		Current Liabilities	$35,000
Other current assets	60,000		Long-term Notes Payable	40,000
Total current assets	$100,000		Bonds Payable	50,000
Investments	$25,000		Capital Stock	150,000
Fixed assets (net)	110,000		Retained earnings	80,000
Land	$120,000
Total assets	$355,000		Total Liabilities and Equity	$355,000

During 2011, the following occurred

a. Mr. Wizard's sold some of its investments for $13,000 which resulted in a gain of

$300 after taxes. The gain (net of taxes) has been included in the company's 2011 net income.

b. Additional land for a plant expansion was purchased for $25,000.

c. Bonds payable were paid in the amount of $10,000.

d. An additional $35,000 in capital stock was issued.

e. Dividends of $15,000 were paid to stockholders.

f. Net income for 2011 was $48,000 after allowing for $15,000 in depreciation.

g. A second parcel of land was purchased through the issuance of $10,000 in bonds,

and $5,000 in long-term notes payable.

Required:

a. Prepare a statement of cash flows for the year ended 12/31/2011.

(check figure: ending cash balance = $72,500)

b. Prepare a condensed balance sheet for Mr. Wizard's at December 31, 2011.

Answer rating: 100% (QA)

1 Income Statement Heres the income statement with gross profitoperating incomeand net income identified Sales Revenue 600000 Cost of Goods Sold 25000... View the full answer