Question

LE SHERMAN EQUIPMENT CO. Income Statement For the Year Ending December 31, Year 2 Gross Margin Operating Expenses Total Operating Expenses Operating Income Non-Operating Items Net Income

Answer 1

1. a.

Sherman Equipment Co. Income Statement For the Year ended December 31, Year 2
Sales Revenue		$ 320,000
Cost of Goods Sold		148,000
Gross Margin		172,000
Operating Expenses
Salaries Expense	69,000
Uncollectible Accounts Expense	8,100
Other Operating Expenses	62,000
Total Operating Expenses		139,100
Operating Income		32,900
Non-operating Items
Interest Revenue		5,400
Net Income		$ 38,300

b.

Sherman Equipment Co. Balance Sheet December 31, Year 2
Assets
Current Assets	$	$
Cash	48,100
Accounts Receivable,net	48,200
Notes Receivable	24,000
Interest Receivable	1,500
Inventory	98,300
Supplies	1,200
Prepaid Rent	12,500
Total Current Assets		233,800
Property Plant and Equipment
Land		40,000
Total Assets		$ 273,800
Liabilities and Stockholders Equity
Current Liabilities
Accounts Payable	46,000
Salaries Payable	12,000
Total Liabilities		58,000
Stockholders Equity
Common Stock	100,000
Retained Earnings	115,800
Total Stockholders Equity		215,800
Total Liabilities and Stockholders' Equity		$ 273,800