$1.$ With Kim$$s help, Richard has purchase, installed and setup his new accounting software program.$$ In fact, he has just printed his first income statement and balance sheet, reproduced below.

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$$ Star Industries

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$$ Income Statement

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for year ending $12/31/20$XX

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Sales revenue

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$556,428$

Less cost of goods sold

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$205,200$

Gross margin

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$351,228$

Less operating expenses

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Marketing

$40,000$

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Sales and administrative

$20,000$

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Depreciation

$10,000$

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Total operating expenses

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$70,000$

Operating income

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$281,228$

Less interest expense

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$7,000$

Income before taxes

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$274,228$

Income tax expense

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$40,000$

Net income

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$234,228$

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$$ Star Industries

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$$ Balance Sheet

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$$ for $12/31/20$XX

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Assets

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Current Assets

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Cash

$$$$52,400\mathrm{.}00$

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Accounts receivable

$$$$11,000\mathrm{.}00$

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Inventory

$$$$15,900\mathrm{.}00$

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Total current assets

$$$$79,300\mathrm{.}00$

Fixed assets

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Property, plant and equipment

$$$$80,000\mathrm{.}00$

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Accumulated depreciation

$$$ $(20,000\mathrm{.}00)$

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Net fixed assets

$$$$60,000\mathrm{.}00$

Total assets

$$$$139,300\mathrm{.}00$

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Liabilities and Owner's Equity

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Current liabilities

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Accounts payable

$$$$5,300\mathrm{.}00$

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Note payable to bank

$$$$2,700\mathrm{.}00$

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Deposits from customers

$$$$6,000\mathrm{.}00$

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Total current liabilities

$$$$14,000\mathrm{.}00$

Long term mortgage

$$$$40,000\mathrm{.}00$

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Total liabilities

$$$ $54,000\mathrm{.}00$

Owner's Equity

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Retained earnings

$$$$85,300\mathrm{.}00$

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Total Owners' Equity

$$$$85,300\mathrm{.}00$

Total liability and equities

$$$$139,300\mathrm{.}00$

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To see if he really understands what$$s going on$,$ Kim asked Richard the following questions.$$ Richard answered most of them correctly, can you?

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$1.$ How much revenue did the business produce? Sales revenues of $556,428$ cost of good sold $205,200$ equals $351228.$

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$2.$ What costs did the business have for financing?

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$3.$ What can you turn into cash in one year?

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$4.$ What did it cost to make your product?

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$5.$ What is the value of everything the company owns?

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$6.$ How much profit did the company make?

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$7.$ How much is the business worth to Richard?

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$8.$ How much does the business need for its continuing operation?

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$9.$ What debts will take longer than a year to pay?

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$10.$ Can this business be considered liquid?

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