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Draw up an income statement and balance sheet for this company for 2019 and 2020. Use the

Question:

Draw up an income statement and balance sheet for this company for 2019 and 2020.

Use the following information for Ingersoll, Inc., (assume the tax rate is 25 percent):

2019 2020 Sales $ 48,892 $ 51,932 Depreciation 7,024 7,030 Cost of goods sold 20,628 23,277 Other expenses 3,986 3,331 Interest 2,518 3,770 Cash 25,636 26,227 Accounts receivable 33,940 38,237 Long-term debt 85,860 100,171 Net fixed assets 215,940 220,130 Accounts payable 32,819 30,767 Inventory 60,344 62,015 Dividends 5,900 8,600

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2019 2020 Sales $ 48,892 $ 51,932 Depreciation 7,024 7,030 Cost of goods sold 20,628 23,277 Other expenses 3,986 3,331 Interest 2,518 3,770 Cash 25,636 26,227 Accounts receivable 33,940 38,237 Long-term debt 85,860 100,171 Net fixed assets 215,940 220,130 Accounts payable 32,819 30,767 Inventory 60,344 62,015 Dividends 5,900 8,600

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Balance sheet as of Dec 31 2019 Cash 25636 Accounts payable 32819 Accounts receivable 3...View the full answer


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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.

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