Question

Net fixed assets 5,500

Sales $4,100
Interest expense 450
Dividends 82
COGS 2,300
Cash 150
Depreciation exp. 330
Receivables 415
Current liabilities 1,200
Inventory 850
Long-term debt 3,100
Tax: rate 30%.Create an income statemenu=t(5) and balance sheet(5) for 2021. Solve for Net income and Total Equity(they are not given, but can be solved by creating the statements. Note. Use only 1 line item for equity

Answer 1

To create the income statement, calculate the gross profit, operating income, and net income. For the balance sheet, calculate the total assets, total liabilities, and total equity.

Step-by-step explanation:

To create an income statement and balance sheet for 2021, we need to use the given information and solve for net income and total equity. Let's start with the income statement:

1. Calculate the gross profit by subtracting the cost of goods sold (COGS) from the sales: $4,100 - $2,300 = $1,800.
2. Calculate the operating income by subtracting the interest expense and depreciation expense from the gross profit: $1,800 - $450 - $330 = $1,020.
3. Calculate the net income by subtracting the tax expense (30% of the operating income) from the operating income: $1,020 - ($1,020 * 0.30) = $714.

Next, let's create the balance sheet:

• Calculate the total assets by summing the net fixed assets, cash, receivables, and inventory: $5,500 + $150 + $415 + $850 = $6,915.
• Calculate the total liabilities by summing the current liabilities and long-term debt: $1,200 + $3,100 = $4,300.
• Calculate the total equity by subtracting the total liabilities from the total assets: $6,915 - $4,300 = $2,615.

Therefore, the net income for 2021 is $714 and the total equity is $2,615.