Henry Josstick has just started his first accounting course and has prepared the following balance sheet and income statement for Omega Corp. Unfortunately, although the data for the individual items are correct, he is very confused as to whether an item should go in the balance sheet or income statement and whether it is an asset or liability.

BALANCE SHEET
Payables $ 36 Inventories $ 51
Less accumulated depreciation 121 Receivables 40
Total current assets Total current liabilities
Long-term debt $ 355 Interest expense $ 26
Property, plant, and equipment 525 Total liabilities
Net fixed assets Shareholders’ equity $ 94
Total assets Total liabilities and shareholders’ equity
INCOME STATEMENT
Net sales $ 710
Cost of goods sold 585
Selling, general, and administrative expenses 39
EBIT
Debt due for repayment $ 26
Cash 16
Taxable income
Taxes $ 16
Depreciation 13
Net income
Prepare the balance sheet and income statement by rearranging the above items. (Be sure to list the assets and liabilities in order of their liquidity. Enter all amounts as positive values.)

INCOME STATEMENT

Net sales                                        $710

Cost of goods sold                       ($585)

Selling, gen & admin expenses   ($39 )

Depreciation                                 ($13)  

EBIT                                                 $73

Interest expense                           ($26 )

Taxable income                              $47

Taxes                                             ($16 )

Net income                                   $31

Balance Sheet

Property, plant, and equipment  $525

Less accumulated depreciation ($121)

Net fixed assets                                          $404

Inventories                                     $51

Cash                                               $16

Receivables                                   $40

Total current assets                                    $107

Total Assets                                               $511

Shareholders’ equity                                   $94

Long-term debt                               $355

Payable                                 $36

Debt due for repayment      $26

Total current liabilities                     $62

Total liabilities                                             $417

Total liabilities & shareholders’ equity       $511

Explanation:

Sales and Expenses balances are included in Income statement. Assets, Equity and Liabilities balances are included in the balance sheet.

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