Question

Write a paragraph explaining the income statement and the balance sheet, write how the company is doing, and anything to note or watch for. Note any differences from the previous quarter's balance sheet.

Supplies Company
Budgeted Income Statement
For the Quarter Ended September 30th
Sales				1,985,000
Cost of Goods Sold				(893,250)
Gross Margin				1,091,750
Selling and Administrative Expenses
Shipping			99,250
Other			158,800
Salaries and Wages			255,000
Advertising			150,000
Prepaid Insurance			9,000
Depreciation			75,000
Net Operating Incomes				747,050
Less Interest Expense				344,700
Net Income				(4,270)
				340,430

Supply Company
Balance Sheet
September 30th
Assets
Current Assets:
Cash			$120,105
Accounts receivable			332,500
Inventory			34,650
Prepaid Insurance			9,000
Total Current Assets				496,255
Buildings and Equipment (Net)				1,075,000
Total Assets				$1,571,255
Liabilities and Equity
Accounts Payable			102,825
Notes Payable				102,825
Stockholder's Equity
Capital Stock				420,000
Retained Earnings				1,048,430
Total Liability and Equity				1,571,255

Supply Company
Balance Sheet
Previous Year End
Assets
Current assets:
Cash	$                      40,000
Accounts receivable	$                    340,000
Inventory	$                      50,000
Prepaid insurance	$                      18,000
Total current assets		$          448,000
Buildings and equipment (net)		$          860,000
TOTAL ASSETS		$       1,308,000
Liabilities and Equity
Liabilites
Accounts payable	$                    130,000
Notes payable	$                               -
Total liabilities		$          130,000
Stockholder's equity
Capital stock	$                    420,000
Retained earnings	$                    758,000
Total equity		$       1,178,000
TOTAL LIABILITIES AND EQUITY		$       1,308,000

Answer 1

Income Statement: Income statement defines the amount of profit earned by the company during a particular period. In the current period, total sales of the company are $1.985 million and the direct cost is $ 0.89 million, representing a gross profit of $ 1.095 million which shows a gross profit 55% on sales. Total Other expenses of the company are $0.344 million. EBIT is $.75 million showing EBIT ratio is 38%. Further, Interest expenses of the company are 0.34 million showing a total profit of $ .4million showing a net profit ratio is 20%.

Balance Sheet: Balance sheet defines the position of the company at a particular point in time. Total Profit of the company $1.57 million out of which current asset is $ 0.496 million and non-current assets is $ 1.074 million. The current ratio of the company is 4.86 (current assets/current liabilities). Last year the current ratio was 3.4, an increase in current ratio shows that the company will effectively meet its current obligation. In the current period the company has made a fresh investment of $140,000 in the non-current assets which again shows the improvement in the business

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