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). 1. Sales were $1,000,000 11. III. => IV. V. VI. Gross profit margin was 60% Operating margins were 12% 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. The combined federal and provincial tax rates is 27% Wally knows that the ending cash balance in his company is 200,000. Accounts Receivables is 10% of sales Inventory is 15% of sales VII. VIII. IX. Accounts Payable is 5% of sales X. XI. XII. XIII. Accrued expenses payable is 5.5% of sales Capital equipment purchases were made at the start of the year. These total $50,000. These depreciate at 10% per year The owner will provide all other capital in the form of equity financing 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 Operating profit margins were 15% II. Gross profit margin was 55% IV. V. Interest expense fell to 7%, given a change in interest rates 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)