Financial Statements Develop an Income Statement for 20xX Ca

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. a. 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 - So (Mr. and Mr. Lee were the only ones working and did not pay themselves) . Advertising fees $2000 - Bank fees $150 . Phone/internet- $1200 e Shioning $3 pe

Solution

                          INCOME STATEMENT FOR THE YEAR ENDING20XX

PARTICULARS

Amt($)

Sales

33600

Less Cost of Goods Sold

12600

Gross Profit

21000

Less Operating and Admin. Expenses

Advertising Exp

2000

Bank Fees

150

Phone/Internet

1200

Shipping

1260

Utilities

900

Office Supplies

800

Depreciation

800

Total Admin/Operating Expenses

7110

Profit Before Tax and Interest

13890

Less

Repayment of note payable

5000

Interest on notes payable

350

Profit Before Tax

8540

Less Tax at 26%

2220

Net Profit

6320

.

Cash flow Statement:

Particulars

Amt($)

Sales (CASH)

33600

Additions

Sale of equipment(3000-800{cost-dep})

2200

Depreciation (since it is a non cash expenditure)

800

Deductions

Repayment of note payable

5000

purchase of machine

1600

Raw material (considering it to be purchased this year)

10500

Cash at the end of year

19500

Cash flow statement t shows the source and application or use of cash in business.

                                                  Balance Sheet:

Liabilities

Amt($)

Assets

Amt($)

Common Stock (Shares)

15000

Cash

10000

Notes

5000

Raw Material

10500

Retained Earnings

4500

Equipments After Depreciation

4000

Total Liabilities

24500

Total Assets

24500

Net profit ratio (NP Ratio)

NP Ratio= Net Profit x 100/ Sales

=6320 x 100/ 33600

=19% approx.

Quick Ratio (QR)

QR= Cash+ Receivables/ Current Liabilities

=10000/5000=2:1

Ideal ration although 1:1

Debt to Equity Ratio or D/E Ratio

Debt-Equity Ratio=Debt/ Equity funds

=5000/15000

=0.33

PARTICULARS	Amt($)
Sales	33600
Less Cost of Goods Sold	12600
Gross Profit	21000
Less Operating and Admin. Expenses
Advertising Exp	2000
Bank Fees	150
Phone/Internet	1200
Shipping	1260
Utilities	900
Office Supplies	800
Depreciation	800
Total Admin/Operating Expenses	7110
Profit Before Tax and Interest	13890
Less
Repayment of note payable	5000
Interest on notes payable	350
Profit Before Tax	8540
Less Tax at 26%	2220
Net Profit	6320