$1)$ 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 $7501,250$

Accumulated depreciation $1,0001,400$

Common stock $4,5005500$

Paid$-$in capital $7,5008500$

Retained earnings $1,5003,500$

Accounts payable $750950$

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 $31,2011.$