Problem: The following is the December 31, 2006 balance sheet for the Epic Corporation.
| Assets |
|
Liabilities |
|
| Cash |
$70,000 |
Accounts Payable |
$100,000 |
| Accounts Receivable |
150,000 |
Notes Payable |
120,000 |
| Inventory |
280,000 |
Bonds Payable |
300,000 |
| Total Current Assets |
$500,000 |
Total Liabilities |
$520,000 |
| Plant and Equipment |
$1,250,000 |
Equity |
|
| Less: Accum. Depreciation |
250,000 |
Common Stock |
300,000 |
| Net Plant and Equipment |
$1,000,000 |
Paid In Capital |
200,000 |
| |
|
Retained Earnings |
480,000 |
| Total Assets |
$1,500,000 |
Total Equity |
$980,000 |
| |
|
Total Liab. & Equity |
$1,500,000 |
Sales for 2006 were $2,000,000, with the cost of goods sold being 55% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm's tax rate is 40%.
Prepare an income statement.