Innovative Product Incorporated needs to prepare financial statements based on the information given below for the year
Question:
Innovative Product Incorporated needs to prepare financial statements based on the information given below for the year end 31st December 2019. The information obtain are as follows:-
Interest revenue 50,000
Depreciation 5,000
Administrative expenses 6000
Sales 50,000
Interest expenses 1,000
Selling expenses 9,000
Cost of good sold 25,000
Tax 35%
Equipment 60,000
Inventory 20,000
Vehicles 40,000
Land and building 180,000
Cash and cash equivalent 200,000
Income tax payable 70,000
Account payable 64,000
Retained earnings 100,000
Account Receivable 34,000
Common stock 100,000
Long term debt 200,000
Question:
1. Prepare the financial statements necessary based on the information given.
2. Analyze the Innovative Product Incorporated financial strength by quantifying the financial ratios.
3. Forecast the changes in the financial strength that might take place if the following changes takes place in the macroeconomic fundamentals.
a. Expected inflation rate to increase 3%
b. Current GDP is -4.5 %
c. Unemployment rate 3%
d. Interest rate 4%
e. Exchange rate has depreciated 5%
f. Government is giving out subsidy and also increasing tax rates to finance its expenditure.
Expert Answer:
1 Prepare the financial statements necessary based on the information given Statement of Financial Position Innovative Product Incorporated As at 31 December 2019 ASSETS NonCurrent Assets Equipment 60... View the full answer
