1) Financial statement production and review (20 marks) (a) Wally has provided the information below and asked you to create an Income Statement for TimCo for 2019 and Balance Sheet for TimcCo as at December 31, 2019. (Income Statement = 5 marks and Balance Sheet = 7.5 marks).

I. Sales were $1,000,000 II. Gross profit margin was 60% III. Operating margins were 12% IV. The Bank of Toronto provided a loan on Jan 1, 2019 worth $300,000. The annual interest is 8% and is compounded annually. Interest only payments are needed until the loan is due in 10 years, where a balloon payment for the full balance must be paid. V. The combined federal and provincial tax rates is 27% VI. Wally knows that the ending cash balance in his company is 200,000. VII. Accounts Receivables is 10% of sales VIII. Inventory is 15% of sales IX. Accounts Payable is 5% of sales X. Accrued expenses payable is 5.5% of sales XI. Capital equipment purchases were made at the start of the year. These total $50,000. These depreciate at 10% per year XII. The owner will provide all other capital in the form of equity financing XIII. Wally has asked you to figure out his SG&A (Selling General and Administrative expenses).

(b) Wally asks you to create an Income Statement for 2020 using the information below (5 marks) I. 2020 sales were 125% of 2019 sales II. Gross profit margin was 55% III. Operating profit margins were 15% IV. Interest expense fell to 7%, given a change in interest rates V. The tax rate was 30% (c) Based on the change in Income between 2020 and 2019, how would you say TimCo is doing? (2.5 marks)