Question

1. Financial Statements: Develop an Income Statement for 20XX, Cash Flow Statement for 20XX, and Balance Sheet as of the end of 20XX based on the data provided below for year 20XX. All sales are collected when the sale is made and all expenses are paid when the expense is incurred. Explain the purpose of each financial statement.
   1. Income Statement Data for 20XX:
      • Units produced and sold = 420
      • Sales ($80 per unit selling price) = $33600
      • Cost of goods sold ($30 per unit, all variable costs) = $12600
      • Labor = $0 (Mr. and Mr. Lee were the only ones working and did not pay themselves)
      • Advertising fees =$2000
      • Bank fees = $150
      • Phone/internet = $1200
      • Shipping ($3 per unit) = $1260
      • Utilities = $900
      • Office supplies = $800
      • Interest expense on note payable = $350
      • Depreciation expense (straight line) = $800
      • Income tax rate = 26 %
   2. Other Financial Data for 20XX:
      • Proceeds from sale of equipment = $3000. The equipment originally cost $1000 and had accumulated depreciation of $200.

BASELINE INCOME STATEMENT, YEAR ENDING DECEMBER 31, 20XX
Sales
Cost of Goods Sold
Gross profit			$       -
Selling, General and Administrative Expenses
Shipping
advertising fees
Bank fees
Phone/internet
Utilities
Office supplies
Depreciation expense (straight line)
Total SGA Expenses			$       -
Operating Income (EBIT)			$       -
Interest expense on loan
Pre-tax income			-
Taxes Payable @ xx%
NET INCOME before gain on sale of Asset			$       -
Gain on sale of asset (+)
Taxes on gain (-) @xx%
Net impact of Sale of Asset			$       -
Net Income			$       -
Memo Total Taxes			$       -

Answer 1

Balance Sheet and Cash flow cannot be prepared because of missing data. Income statement is as below:

33,600 12,600 21,000 Sales Cost of goods sold Gross Profit Selling, General and Administrative Expenses Shipping Advertising fees Bank fees Phone/Internet Utilities Office Supplies Depreciation Expense (Straight Line) Total SGA Expenses Operating Income (EBIT) Interest Expense on Loan Pre-Tax Income Taxes Payable @26% Net Income before gain on sale of Asset Gain on sale of Asset Taxes on gain @26% Net Impact of Sale of Asset 1,260 2,000 150 1,200 900 800 800 7,110 13,890 350 13,540 3,520 10,020 2,200 572 1,628 11,648 Net Income Memo Total Taxes 4,092