From the following information, construct a simple income statement and a balance sheet: Sales $1,000,000
Finished goods 250,000
Long-term debt 200,000
Raw materials 80,000
Cash 70,000
Cost of goods sold 500,000
Accounts receivable 150,000
Plant and equipment 410,000
Interest expense 70,000
Number of shares outstanding 80,000
Earnings before taxes 370,000
Taxes 100,000
Accounts payable 160,000
Other current liabilities 60,000
Other expenses 60,000
Equity 540,000

Answer and Explanation:

The Preparation of the simple income statement and a balance sheet is shown below:-

                                   Corporation X

                                  Income Statement

                                 for the Year Ended

Particulars                                        Amount

Sales                                                $1,000,000

Less: Cost of goods sold               $500,000

Gross profit                                      $500,000

Less: Other expenses                     $60,000

EBIT                                                  $440,000

Less: Interest                                   $70,000

EBT                                                   $370,000

Less: Income tax                              $100,000

Net income                                       $270,000

Number of shares outstanding       $80,000

Earning per share                             $3.375

(Net income ÷ Number of shares outstanding)

                                   Corporation X

                                  Income Statement

                                 for the Year Ended

Particulars                                        Amount

Assets

Cash                                                $70,000

Accounts Receivable                     $150,000

Inventory

Raw Material                                   $80,000

Finished Goods                              $250,000

Total Current Assets                      $550,000

Plant & Equipment                          $410,000

Total Assets                                    $960,000

Liabilities

Accounts Payable                          $160,000

Other Current Liabilities                 $60,000

Total Current Liabilities                  $220,000

Long term Debt                              $200,000

Equity                                              $540,000

Total Liabilities & Equity                 $960,000

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