1. For this problem, use the following randomly generated list of accounts, placing them in appropriate order to prepare an income statement.

Accounts	($000,000)
Depreciation	25
General and administrative expenses	22
Sales	345
Sales expenses	18
Cost of goods sold	255
Lease expense	4
Interest expense	3

The following randomly constructed table requires that as part of your Critical Thinking Assignment you arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profit, operating profit, and net profit before taxes.

Using a 35% tax rate, calculate taxes paid and net profit after taxes.

Assuming a dividend of $1.10 per share with 4.25 million shares outstanding, calculate EPS and additions to retained earnings.

2. Explain why the income statement can also be called a profit-and-loss statement. What exactly does the word balance mean in the title of the balance sheet? Why do we balance the two halves?

3. CS Industries, Inc. began 2016 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred stockholders, holding 500,000 shares, were paid two semiannual dividends of $0.75 per share. The firm had a net profit after taxes of $5.15 million. Prepare the statement of retained earnings for the year ended December 31, 2016.