Question

Hytek Corporation ended last year with cash of $50.000, accounts receivable of $100,000, and inventory of $300,000. Property, plant, and equipment were valued at their original cost $470,000, less accumulated depreciation of $$170,000. Current liabilities other than income taxes owed were $120,000, and long-term debt was $250,000. Stockholders' equity consisted of (a) $90,000 capital stock investment and (b) accumulated retained earnings, which had totaled $130,000 at the end of 2017. Net sales for 2018 were $900,000. Expenses include $500,000 as cost of goods sold, $50,000 as allowances for depreciation, $85,000 as selling expenses, and $65,000 as G&A expenses. Interest income and expensse were $5,000 and $25,000, respectively, and income taxes for the year (unpaid at year's end) were $80,000. Dividends of $20,000 were paid. Prepare a balance sheet and an income statement reflecting these figures.

Answer 1

Answer :-

Balance Sheet for Hytek Corporation as on 2018

Particulars	Amount ($)	Amount ($)
Assets
Non-Current Assets
Plant,Property and Equipment	4,70,000
Less: Accumulated Depreciation	1,70,000	3,00,000
Current Assets
Cash		50,000
Accounts Receivables		1,00,000
Inventory		3,00,000
		7,50,000
Equity and Liabilities
Equity
Capital		90,000
Retained Earnings	1,30,000
Add: Profit/(Loss) during year	1,00,000
Less: Dividend Paid	20,000	2,10,000
Non-Current Liabilities
Long-term Debt		2,50,000
Current Liabilities
Current Liabilities		1,20,000
Income Tax Payable		80,000

7,50,000

Income Statement for the year ended 2018

Particulars	Amount ($)	Amount($)
Revenue from Operations	9,00,000
Other Income	5,000
Total Income (A)		9,05,000
Expenses
Cost of Goods Sold	5,00,000
Interest Expense	25,000
Depreciation	50,00
Selling Expenses	85,000
G&A Expense	65,000
Total Expense (B)		7,25,000
Profit before tax (A-B)		1,80,000
Less: Income Tax		80,000
Profit for the year		1,00,000

Therefore, Profit for the year is $1,00,000.

Note - Dividend paid is not an operating expense and hence not charged to Income Statement. It will be reduced from the Retained Earnings of the company.