Income Statement Balance Sheet Year 1

Revenue 2,200,000 Assets

Cost of goods sold 1,300,000 Current Assets:
Gross profit 900,000 Cash 80,000
Selling & admin expense 420,000 Accounts receivable 301,000
Depreciation expense 150,000 Inventory 409,000
Operating income 330,000 Prepaid Insurance 50,000
Interest expense 90,000 Total current assets 840,000
Earnings before taxes 240,000 Investment 80,000
Taxes 80,000 Plant & Equipment:
Earnings after taxes 160,000 Plant & Equipment 2,100,000
Preferred stock dividends 10,000 Less Acc depre 1,100,000
Earnings available to common stockholders 150,000 Total plant & equipment 1,000,000
Total assets 1,920,000
Shares outstanding 120,000 Liabilities
Earning per share 1.25 Current liabilities:
Accounts payable 260,000
Statement of Retained Earnings Notes Payable 400,000
Beginning Retained Earnings 500,000 Accrued expenses 70,000
Earnings available to common stockholders 150,000 Total current liabilities 730,000
Dividends 50,000 Long term liabilities:
Ending retained earnings 600,000 Bonds payable 70,000
Total liabilities 800,000
Disposed of equipment fully depreciated 100,000 Stockholders' equity:
Purchased equipment for cash 400,000 Preferred stock 100 par value 90,000
Common stock 1 par value 120,000
Capital paid in excess of par 410,000
Retained earnings 500,000
Total stockholders' equity 1,120,000
Total liabilities & stockholders' equity 1,920,000
 Year 2 Worksheet Year 1 Year 2 Difference
Cash 80,000 100,000 20,000
Accounts receivable 301,000 355,000 54,000
100,000 Inventory 409,000 430,000 21,000
355,000 Prepaid Insurance 50,000 30,000 (20,000)
430,000 Investment 80,000 70,000 (10,000)
30,000 Plant & Equipment 2,100,000 2,400,000 300,000
915,000 Less Acc depre 1,100,000 1,150,000 50,000
70,000 Accounts payable 260,000 445,000 185,000
Notes Payable 400,000 400,000 0
2,400,000 Accrued expenses 70,000 50,000 (20,000)
1,150,000 Bonds payable 70,000 120,000 50,000
1,250,000 Preferred stock 100 par val 90,000 90,000 0
2,235,000 Common stock 1 par value 120,000 120,000 0
Capital paid in excess of pa 410,000 410,000 0
Retained earnings 500,000 600,000 100,000
445,000
400,000 Assets 1,920,000 2,235,000 315,000
50,000 Liabilities 800,000 1,015,000 215,000
895,000 Equity 1,120,000 1,220,000 100,000
Assets - Liabilities & Equity 1,920,000 2,235,000 315,000
120,000
1,015,000 295,000
(215,000)
90,000 (100,000)
120,000 (20,000)
410,000
600,000
1,220,000
2,235,000
Statement of Cash Flows
Cash flows form operating activities:
Net Income 160,000 160,000
Adjustments to determine cash flow from operating activities:
Depreciation 150,000 150,000
Increase in accounts receivable (54,000)
Increase in Inventory (21,000)
Decrease in prepaid insurance 20,000
Increase in accounts payable 185,000
Decrease in accrued expenses (20,000)
Total adjustment 260,000
Net cash flows from operating activities 420,000
Net cash flows from investing activities:
Decrease in investments 10,000
Increase in plant and equipment (400,000)
Net cash flows from investing activities (390,000)
Cash flows from financing activities:
Increase in bonds payable 50,000
Preferred stock dividends paid (10,000)
Common stock dividends paid (50,000)
Cash flows from financing activities (10,000)
Net increase in cash flows 20,000
Cash beginning balance 80,000
Cash ending blance 100,000
Income Statement Balance Sheet Year 1
Revenue 2,200,000 Assets
Cost of goods sold 1,300,000 Current Assets:
Gross profit 900,000 Cash 80,000
Selling & admin expense 420,000 Accounts receivable 301,000
Depreciation expense 150,000 Inventory 409,000
Operating income 330,000 Prepaid Insurance 50,000
Interest expense 90,000 Total current assets 840,000
Earnings before taxes 240,000 Investment 80,000
Taxes 80,000 Plant & Equipment:
Earnings after taxes 160,000 Plant & Equipment 2,100,000
Preferred stock dividends 10,000 Less Acc depre 1,100,000
Earnings available to common stockholders 150,000 Total plant & equipment 1,000,000
Total assets 1,920,000
Shares outstanding 120,000 Liabilities
Earning per share 1.25 Current liabilities:
Accounts payable 260,000
Statement of Retained Earnings Notes Payable 400,000
Beginning Retained Earnings 500,000 Accrued expenses 70,000
Earnings available to common stockholders 150,000 Total current liabilities 730,000
Dividends 50,000 Long term liabilities:
Ending retained earnings 600,000 Bonds payable 70,000
Total liabilities 800,000
Disposed of equipment fully depreciated 100,000 Stockholders' equity:
Purchased equipment for cash 400,000 Preferred stock 100 par value 90,000
Common stock 1 par value 120,000
Capital paid in excess of par 410,000
Retained earnings 500,000
Total stockholders' equity 1,120,000
Total liabilities & stockholders' equity 1,920,000
 Year 2 Worksheet Year 1 Year 2 Difference

100,000
355,000
430,000
30,000
915,000
70,000

2,400,000
1,150,000
1,250,000
2,235,000

445,000
400,000
50,000
895,000

120,000
1,015,000 0
0
90,000 0
120,000 0
410,000
600,000
1,220,000
2,235,000
Statement of Cash Flows

160,000

150,000