Complete the homework assignment in Microsoft Word or Excel. Clearly label and organize each problem and show your work.

1. a. (Income statement) At the end of its third year of operations, the Best Manufacturing Co. had $4,500,000 in revenues; $3,375,000 in cost of goods sold; $450,000 in operating expenses, which included depreciation expense of $150,000; and had a tax liability equal to 35 percent of the firms taxable income. What is the net income of the firm for the year?

b. Best Manufacturing Co. plans to reinvest $50,000 of its earnings back in the firm. What does this plan leave for the payment of a cash dividend to Bests stockholders?

2. (Income statement) If the Mayfield Steel Fabrication Company earned $500,000 in net income and paid a cash dividend of $300,000 to its stockholders, what are the firms earnings per share if the firm has 100,000 shares of stock outstanding?

3. (Review of financial statements) Prepare a balance sheet and income statement for the Terrence Company from the following scrambled list of items:

Depreciation expense	$66,000
Cash	225,000
Long-term debt	334,000
Sales	573,000
Accounts payable	102,000
General and administrative expense	79,000
Buildings and equipment	895,000
Notes payable	75,000
Accounts receivable	167,500
Interest expense	4,750
Accrued expenses	7,900
Common stock	289,000
Cost of goods sold	297,000
Inventory	99,300
Taxes	50,500
Accumulated depreciation	263,000
Taxes payable	53,000
Retained earnings	262,900

1. Prepare an income statement for the Terrence Company.

2. Prepare a balance sheet for the Terrence Company.

3. What can you say about the firms financial condition based on these financial statements?