Q$3.$ For December $31,2017,$ the balance sheet of the Baxter Corporation is as follows: Q$3.$a: Prepare an income statement and a common$-$size income statement for $2018.$ Pales for the vear $2018$

Cast af gaads sald

$$220\mathrm{.}000$

Salling and administrative expense

Oapreciation aut af grass plant

Interest expense $1.$

interest expenses $2$

The averiage tax rath

Praferred stock dividends.

Camman stack dividends

Shares autstanding

af salas

$$22,000$

ase of grass plant and equipment at Jan. $01,2018$

$10\%$ af nates payable based an Dac. $31,2017,$ balance

$12\%$ of bands payable based an Dac. $31,2017,$ balance

Prepare the I$/$S$,$ B$/$S$,$ C$/$F statements as well as in the common size statements for $2018.$

Don't put the numbers directly. You have to use the cell operations, i$.$e$.,=$A$3-$G$3.$ a$.$ Income statement: Dec. $312018$

Also, note that there are three questions, Q$3$a$,$ Q$3$b$,$& Q$3$c$.$Year $2018$ Common Size

Sales $$220,000$

Baxter Corporation: Balance Sheet, December $31,2017$ Cost of goods sold $$132,000$

Current Asset Liabilities Gross profit $$88,000$

Cash & Cash equivalents $$10,000$ Accounts payable $$12,000$ Selling & administrative expenses $$22,000$

Accounts receivable $15,000$ Note Payable $20,000$ Depreciation expenses $*$ $$20,000$

Inventory $25,000$ Bonds Payable $50,000$ EBIT $$2,000$

Prepaid Expense $12,000$ Interest expenses $$6,000$

Current Assets Total $$62,000$ Current Liab. Total $$82,000$ EBT

Taxes $(20\%)$

Fixed Assets Stockholders$$ Equity EAT

Plant & equipment $($gross$)$ $$250,000$ Common stock $$75,000$ Preferred stock dividends

Less: Accumulated Depreciation $50,000$ Paid$-$in capital $25,000$ Earnings available to common stockholders

Net plant and assets $200,000$ Retained earnings $80,000$ Dividends paid to common stockholders

Balance retained in corporation

Total assets $$262,000$ Total liab & equity $$262,000$ Shares outstanding

EPS

Sales for the year $2018$ $$220,000$

Cost of goods sold $60\%$ of sales During $2018$:

Selling and administrative expense $$22,000$ NO change in cash & pre$-$paid expenses and $10\%$ increase in accounts receivable & inventory.

Depreciation out of gross plant $8\%$ of gross plant and equipment at Jan. $01,2018$ A new machine $($$$35,000)$ was purchased on $12/31/2018,$ and its depreciations start from year $2019.$

Interest expense $110\%$ of notes payable based on Dec. $31,2017,$ balance Accounts payable increased by $25\%$

Interest expense $212\%$ of bonds payable based on Dec. $31,2017,$ balance Notes payable increased by $$6,000$ at the end of the year $2018$

The average tax rate $20\%$ of EBT bonds payable decreased by $$10,000$ at the end of the year $2018$

Preferred stock dividends $$2,000$ No change in common stock and paid$-$in capital in excess of par

Common stock dividends $$8,400$

Shares outstanding $10,000$

Q$3.$b: Prepare a balance sheet and a common$-$size balance sheet as of December $31,2018$

b$.$ Balance Sheet: Dec. $312018$

Year $2018$ common$-$size

Current Assets:

Cash & Cash equivalents

Accounts receivable

Inventory

Prepaid expenses

Current Assets Total

Plant and equipment

Less: Accumulated depreciation

Net plant and assets

Total assets

Current liabilities:

Accounts payable

Notes payable

Bonds payable

Current Liabilities Total

Stockholders' equity:

Common stock

Paid$-$in capital in excess of par

Retained earnings

Stockholders' equity:

Total liabilities and stockholders' equity

Q$3.$c: Prepare a statement of cash flow for $2018.$

c$.$ Statement of Cash Flows: Dec. $312018$

Cash flows from operating activities:

Net income $($EAT$)$

$$ Add back depreciation

$$Increase in accounts receivable

$$Increase in inventory

$$Increase in accounts payable

$$Net cash generated by operating activities

Cash flow from investing activities:

$$Increase in gross fixed assets

Net cash used in investing activities

Cash flows from financing activities:

$$Increase in note payable

$$Decrease in bond payable

$$Common stock dividends paid

$$Preferred stock dividends paid

Net cash used in financing activities

Net change in cash and cash equivalents