The following is the December 31, 2003 balance sheet for the Epics Corporation.
Assets Liabilities
Cash $ 70,000 Accounts Payable $ 100,000
Accounts Receivable 150,000 Notes Payable 120,000
Inventory 280,000 Bonds Payable 300,000
Total Current Assets $ 500,000 Total Liabilities $ 520,000
Plant and Equipment $1,250,000 Equity
Less: Accum. Deprec. 250,000 Common Stock 300,000
Net plant and Equipment $1,000,000 Paid In Capital 200,000
Retained Earnings 480,000
Total Assets $1,500,000 Total Equity $ 980,000
Total Liab. & Equity $1,500,000
Sales for 2003 were $2,000,000, with the cost of goods sold being 55% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm’s tax rate is 40%.
Prepare an income statement.
Difficulty: Medium
Answer:
Income Statement
Sales $2,000,000
Less: Cost of Goods Sold 1,100,000
Gross Profit 900,000
Less: Selling and Administrative Expense 200,000
Depreciation expense 125,000
EBIT 575,000
Less: Interest Expense (10,800 + 33,000) 43,800
EBT 531,200
Less: Taxes (40%) 212,480
Net Earnings $ 318,720
Assets Liabilities
Cash $ 70,000 Accounts Payable $ 100,000
Accounts Receivable 150,000 Notes Payable 120,000
Inventory 280,000 Bonds Payable 300,000
Total Current Assets $ 500,000 Total Liabilities $ 520,000
Plant and Equipment $1,250,000 Equity
Less: Accum. Deprec. 250,000 Common Stock 300,000
Net plant and Equipment $1,000,000 Paid In Capital 200,000
Retained Earnings 480,000
Total Assets $1,500,000 Total Equity $ 980,000
Total Liab. & Equity $1,500,000
Sales for 2003 were $2,000,000, with the cost of goods sold being 55% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm’s tax rate is 40%.
Prepare an income statement.
Difficulty: Medium
Answer:
Income Statement
Sales $2,000,000
Less: Cost of Goods Sold 1,100,000
Gross Profit 900,000
Less: Selling and Administrative Expense 200,000
Depreciation expense 125,000
EBIT 575,000
Less: Interest Expense (10,800 + 33,000) 43,800
EBT 531,200
Less: Taxes (40%) 212,480
Net Earnings $ 318,720
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