Help 2 int Solomon Manufacturing Company (SMC) was started when it acquired $92,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $56,000. SMC also incurred $56,000 of engineering design and planning costs. There was a debate regarding how the design and planning costs should be classified. Advocates of Option 1 believe that the costs should be classified as general, selling and administrative costs. Advocates of Option 2 believe it is more appropriate to classify the design and planning costs as product costs. During the year, SMC made 4,000 units of product and sold 3,100 units at a price of $35.00 each. All transactions were cash transactions. Required a-1. Prepare a GAAP-based income statement and balance sheet under option 1 a-2. Prepare a GAAP-based income statement and balance sheet under option 2. b. Identify the option that results in financial statements that are more likely to leave a favorable impression on investors and creditors c. Assume that SMC provides an incentive bonus to the company president equal to 13 percent of net income. Compute the amount of the bonus under each of the two options. Identify the option that provides the president with the higher bonus. d. Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. Identify the option that minimizes the amount of the company's income tax expense. Complete this question by entering your answer in the tabs below. Red Al Inc Stmt Req Al Bal Sheet Reg A2 Inc Stmt Reg A2 Bal Sheet Reg B Reg C Reg D Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. Identify the option that minimizes the amount of the company's Income tax expense. (Round your answers to the nearest whole dollar) Complete this question by entering your answer in the tabs below. 12 Req A1 Inc Stmt Req A1 Bal Sheet Req A2 Inc Stmt Req A2 Bal Sheet Reg B Reqc Reg D Prepare a GAAP-based income statement for Option 1. Print SOLOMON MANUFACTURING COMPANY Income Statement $ Sales revenue Selling, general, and administrative expenses Gross margin Design expenses income tax expenses 108,500 56,000 52,500 56,000 Net income $ (3,500) Req A1 Inc Stmt Reg A1 Bal Sheet Reg A2 Inc Stmt Reg A2 Bal Sheet Req B Reqc Reg D Prepare a GAAP-based balance sheet for Option 1. int SOLOMON MANUFACTURING COMPANY Balance Sheet Assets Total assets $ 0 Equity Total equity $ 0 Complete this question by entering your answer in the tabs below. 12 Req A1 Inc Stmt Req A1 Bal Sheet Reg A2 Inc Stmt Req A2 Bal Sheet Reg B Reqc Reg D Prepare a GAAP-based income statement for Option 2. Print SOLOMON MANUFACTURING COMPANY Income Statement 0 Complete this question by entering your answer in the tabs below. 12 Reg A1 Inc Stmt Req A1 Bal Sheet Req A2 Inc Stmt Req A2 Bal Sheet Req B ReqC Reg D Prepare a GAAP-based balance sheet for Option 2. Print SOLOMON MANUFACTURING COMPANY Balance Sheet Assets Total assets $ 0 Equity Total equity luentity the option that results in financial statements that are more likely to leave a ravorable impression on investo creditors. c. Assume that SMC provides an incentive bonus to the company president equal to 13 percent of net income. Comput of the bonus under each of the two options. Identify the option that provides the president with the higher bonus. d. Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. option that minimizes the amount of the company's income tax expense. Complete this question by entering your answer in the tabs below. Reg A2 Inc Stmt Reqc Reg D Req A1 Inc Req Al Bal Reg A2 Bal Stmt Sheet Sheet Reg B Identify the option that results in financial statements that are more likely to leave a favorable impression on investors and creditors. The option most favorable to investors and creditors Option 2 Complete this question by entering your answer in the tabs below. Reg A1 Inc Stmt Reg A1 Bal Sheet Req A2 Inc Stmt Req A2 Bal Sheet Req B Reqc Req D Assume that SMC provides an incentive bonus to the company president equal to 13 percent of net income. Compute the amount of the bonus under each of the two options. Identify the option that provides the president with the higher bonus (Round your answers to the nearest whole dollar.) Option no. 1 bonus Option no. 2 bonus The option that provides the president with the higher bonus Option 2 Sirved Help D. Identify the option that results in Tinancial statements that are more likely to leave a tavorable impression on investors ana creditors. c. Assume that SMC provides an incentive bonus to the company president equal to 13 percent of net income. Compute the amount of the bonus under each of the two options. Identify the option that provides the president with the higher bonus. d. Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. Identify the option that minimizes the amount of the company's income tax expense. Complete this question by entering your answer in the tabs below. Req A1 Inc Stmt Reg Ai Bal Sheet Reg A2 Inc Stmt Reg A2 Bal Sheet Reg B Reg C Reg D Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. Identity the option that minimizes the amount of the company's income tax expense. (Round your answers to the nearest whole dollar) Option no. 1 income tax expense Option no 2 income tax expense The option that minimizes the amount of the company's income tax expense