1. It is December 31, 2016 and Mr. X needs your help again. He wants you to create his Income Statement for 2016. Please use the following information to create the 2016 Income Statement.

1. 2016 sales were 125% of 2015 sales
2. Gross profit margin was 55%
3. Operating profit margins were 15%
4. Interest expense fell to 7%, given a change in interest rates
5. The tax rate was 30%

OBD Inc.
Income Statement
For the Year Ended December 31, 2015
Sales	1000000
Cost of goods sold	400000
Gross profit (60% x $1000000)	600000
Operating expenses:
Depreciation expense	5000
Selling and administrative expense	475000
Operating income (12% x $1000000)	120000
Interest expense (8% x $300000)	64000
Income before income taxes	56000
Income tax expense (27% x $56000)	15120
Net income	40880

OBD Inc.
Balance Sheet
December 31, 2015
Assets
Cash	200000
Accounts receivable (10% x $1000000)	100000
Inventory (15% x $1000000)	150000
Equipment	50000
Less: Accumulated depreciation (10% x $50000)	-5000
Total assets	495000
Liabilities and Owner's Equity
Accounts payable (5% x $1000000)	50000
Accrued expenses payable (5.5% x $1000000)	55000
Long-term loan payable	300000
Capital	49120
Retained earnings	40880
Total liabilities and owner's equity	495000