Answer:
Explanation:
Income Statement
Sales $ 203,000
Less: Cost of Goods Sold $-128,000
Gross Profit $ 75,000
Operating Expense $ 54,500
Warranty Expense ($203,000*4%) $ 8,120
Total Operating Expense $ -62,620
Operating Income $ 12,380
Add: Other income/gains
Interest Revenue $ 478
Net Income $ 12,858
Part b-2 Balance Sheet
Assets:
Cash $ 91,100
Inventory $ 47,000
Interest Receivable ($20,500*7%*4/12) $ 478
Total Assets $ 138,578
Liabilities:
Accounts Payable $ 49,100
Estimated Warranty $ 2,120
Sales Tax Payable $ 4,000
Note Payable $ 20,500
Total liabilities $ 75,720
Stockholder's Equity
Common Stock $ 50,000
Retained Earning $ 12,858
Total Stockholder's Equity $ 62,858
Total Liabilities and equity $ 138,578
Part b-2 Cash Flow
Cash flow from operating activities:
Cash from sales $ 219,240
Cash paid for repairs $ -6,000
Cash paid for operating expense $ -54,500
Cash paid for sales tax $ -12,240
Cash paid for purchases $-125,900
Total Cash flow from operating activities $ 20,600
Cash flow from Financing activities:
Issue of common stock $ 50,000
Borrowing from bank $ 20,500
Cash flow from financing activities $ 70,500
Net Increase/decrease $ 91,100
