Question

Create an income statement and balance sheet using the data below

Inputs
Accounts Payable	12,000
Accounts Receivable	10,000
Accruals	10,000
Accumulated Depreciation	100,000
Beginning of year Inventory	50,000
Beginning of year Retained Earnings	120,000
Cash	7,000
Common Stock	121,500
Cost of Goods Sold	200,000
Current Portion - Long Term Debt	1,500
Depreciation Expense	25,000
Dividends	40,000
Gross Property, Plant, and Equipment	400,000
Interest Expense	15,000
Long Term Debt (excluding current portion)	120,000
Net Sales	400,000
Operating Expenses (excluding depreciation)	40,000
Purchases	250,000
Tax rate	40%

Answer 1

Income Statement :

Particulars	Year 1
Net Sales	400000
Less : Cost of Goods Sold	200000
Less :Operating Expenses except Depreciation	40000
Less ; Depreciation Expenses	25000
Operating Income (or EBIT)	135000
Less :Interest Expenses	15000
Taxable Income	120000
Less :Taxes @40%	48000
Net Income	72000
Common Stock Dividend Paid	40000
Addition to retained Earning	32000

Balance Sheet

Assets	Amount	Liabilities & owner's Equity	Amount
Current assets		Current liabilities
Cash	7000	Accounts Payable	12000
Accounts Receivable	10000	Current Portion of Long Term Debt	1500
Inventory	100000	Accruals	10000
Current assets	117000	Current liabilities	23500
		Long Term Debt	120000
Fixed Assets		Owner's Equity
Gross Plant and Equipment 400000	300000	Common Stock and Paid in Surplus	121500
Less: Accumulated Depreciation 100000		Retained Earnings (120000+32000)	152000
		Total	273500
Total Assets	417000	Total Liabilities &owner's Equity	417000

Note : Year End Inventory = Opening Stock + Purchases - Cost of Goods sold

= 50000 + 250000 - 200000

= 100000