Question: Construct an income statement, using the information provided below. What are the firm's gross profits, operating profits, and net profits? Depreciation expense$22,000 Cost of goods
Construct an income statement, using the information provided below.
What are the firm's gross profits, operating profits, and net profits?
Depreciation expense$22,000
Cost of goods sold$150,000
Marketing expenses$75,000
Administrative expenses$45,000
Sales $450,000
Stock dividends $6,000
Income tax$25,000
Interest expense$8000
2. Construct a balance sheet using the following information.(10 points)
Gross fixed assets $65,000
Cash $12,000
Other assets $17,000
Accounts Receivable $54,000
Retained earnings $16,000
Accumulated depreciation $18,000
Accounts payable $42,000
Long-term note $5000
Mortgage $20,000
Common stock $102,000
Inventory $75,000
Short-term notes $20,000
3. The ABC Corporation's financial statements are shown below.
(A) Use this data to prepare a cash flow statement (cash flows are from operating activities, from investment activities, and from financing activities). Hints: Read page 282-284.
(20 points)
(B) Use this data to find ABC Company's current ratio, return on assets, operating profit margin, total asset turnover, debt ratio, and return on equity.(12 points)
(C) Explain whether the company is doing a good job of earning a return on its assets.(6 points)
Balance Sheets as of December 31, 2018, and December 31, 2019
20182019
Assets
Cash $ 20,200$ 25,000
Accounts receivable 33,00046000
Inventory 84,00096000
Prepaid Rent1,1002000
Total current assets $138,300$169,000
Gross fixed assets $664,000740,000
Accumulated depreciation(394,000)(434,000)
Net fixed assets$270,000$306,000
TOTAL ASSETS $408,300$475,000
Debt (Liabilities) and Equity
Accounts payable $ 57,000$ 52,400
Accrued Expenses9,000 12,000
Short-term notes 9,00020,000
Total current liabilities $ 75,000 $ 84,000
Long-term debt 150,000 185,000
Total debt $ 225,000$ 269,000
Owners' equity
Common stock $22,200$ 34,500
Retained earnings 161,100171,100
Total owners' equity $183,000 $ 205,600
TOTAL LIABILITIES
AND OWNERS' EQUITY $408,300$457,000
Income Statement January 1-December 2019
Sales $650,000
Cost of goods sold (487,500)
Gross profits $ 162,500
Operating expenses (77,500)
Operating profits $ 85,000
Interest expense (12,00)
Profits before taxes $ 73,000
Tax(30,000)
Net profits$ 43,000
Net profits$ 43,000
Dividends paid (33,000)
Increase in retained earnings$ 10,000
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