3. Financial statements for the Sennet Corporation follow:

Sennet Corporation Balance Sheet, December 31 (in millions)

20x1 20x2 20x1 20x2 Cash $ 4 $ 5 Accounts payable $ 8 $10 Accounts receivable 7 10 Notes payable 5 5 Inventory -12 -15 Accrued wages 2 3 Current assets $23 $30 Accrued taxes -3 -2 Net plant 40 40 - - Current liabilities $18 $20 Long-term debt 20 20 Common stock 10 10 Retained earnings 15 -20 Total liabilities Total assets $63 and equity $63 = -$70 = -$70 Sennet Corporation Income Statement, 20x2 (in millions)

Sales $95 Cost of goods sold $50 Selling, general, and administrative expenses 15 Depreciation 3 Interest Net income before taxes Taxes Net income