The partially complete 2012 balance sheet and income statement for Challenge Industries are given below, followed by selected ratio values for the firm based on its completed 2012 financial statements. Use the ratios along with the partial statements to complete the financial statements. 

Challenge Industries, Inc.

Balance Sheet
At December 31, 2012
(in $ thousands)

Assets		Liabilities and Equity
Current assets		Current liabilities
Cash	$ 52,000	Accounts payable	$150,000
Marketable securities	60,000	Notes payable	?
Accounts receivable	200,000	Accruals	80,000
Inventory	?	Total current liabilities	?
Total current assets	?	Long-term debt	425,000
Fixed assets (gross)	?	Total liabilities	?
Less: Accumulated depreciation	240,000	Shareholders’ equity
Net fixed assets	?	Preferred stock	N/A
Total assets	?	Common stock (at par)	150,000
		Paid-in capital in excess of par	N/A
		Retained earnings	390,000
		Total shareholders’ equity	?
		Total liabilities and shareholders’ equity	?

Inventory __________________

Total current liabilities ______________

Total current assets __________

Total liabilities ____________________

Fixed assets (gross) __________

Net fixed assets _____________

Total assets ________________

Total shareholders’ equity ____________

Notes payable ______________

Total liabilities and SHE _____________

Challenge Industries, Inc.

Income Statement
For the Year Ended December 31, 2012

(in $ thousands)

Sales revenue		$ 4,800,000
Less: Cost of goods sold		?
Gross profits		?
Less operating expenses:
Selling expense	$1,010,000
General and administrative expense	470,000
Depreciation	440,000
Total operating expenses		$1,920,000
Earnings before interest and taxes		?
Less: Interest expense		35,000
Earnings before taxes		?
Less: Taxes		130,000
Net income (Net profits after taxes)		?
Less: Preferred dividends		15,000
Earnings available for common stockholders		?
Less: Dividends		60,000
To retained earnings		?

Challenge Industries, Inc.

Ratios for the Year Ended December 31, 2012

Ratio	Value
Total asset turnover	2.00
Gross profit margin	40%
Inventory turnover	10
Current ratio	1.60
Net profit margin	3.75%
Return on common equity	12.5%

Cost of Goods Sold __________

Taxes ____________________

Gross Profits _______________

Net income _______________

EBIT _____________________

Earn common shareholders ____________

Earnings before taxes ________

To retained earnings __________________

Answer rating: 100% (QA)

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