1. With Kim's help, Richard has purchase, installed and setup his new accounting software program. In fact, he has just printed his first income statement and balance sheet, reproduced below. Star Industries Income Statement for year ending 12/21/20XX Sales revenue 556,428 205,200 351,228 40,000 20,000 10,000 Less cost of goods sold Gross margin Less operating expenses Marketing Sales and administrative Depreciation Total operating expenses Operating income Less interest expense Income before taxes Income tax expense Net income 70,000 281,228 7,000 274,228 40,000 214.225 I Star Industries Balance Sheet for 12/31/20XX Assets Current Assets Cash $ 52,400.00 Accounts receivable $ 11,000.00 $ 13,900.00 Inventory Total current assets $ 79,300.00 Fixed assets $ 80,000.00 Property, plant and equipment Accumulated depreciation Net fixed assets $ 20,000.00 $ 60,000.00 Total assets $139,300.00 Liabilities and Owner's Equity Current liabilities Accounts payable Note parable to bank Deposits from customers Total current abilities $5,300.00 32.790.00 $ 8.000.00 STOOD 520,000.00 Long terni mortgage Yotal haline 35.000000 Owner's quity Renained eart $ 0.00 Total One Equin Total ability and equites 35000 300000 To see if he really understand what's going on, Kim asked Richard the following questions. Richard answered most of them correctly, car you? 1. How much revenue did the business produce? 2. What costs did the business have for financing? 3. What can you turn into cash in one year? 4. What did it cost to make your product? 5. What is the value of everything the company owns? 6. How much profit did the company make? 7. How much is the business worth so Richard? 8. How much does the business need for its continutne operation 9 Whar debes will take longer than a wear to pay? 1 10. Can this business be considered liquid? Applying for 1 Loun. Assets Current assets Cash 14,000 Accounts receivable Total current assets 8,000 22,000 Fixed Assets Property, plant & equipment Accumulated depreciation Net fixed assets Total assets 112,000 (35,000) 77,000 99,000 Liabilities and Owner's Equity Current liabilities 2.500 Accounts payable Note payable 26,500 Deposits from customers 5.000 Total current liabilities 34.000 Total liabilities 34.000 Owner's equity Common stock 50.000 Retained earnings 14.000 68.000 Total owner's equity Total liabilities and equity 98,000 1 Use balance sheet to the process of applying for a loan. The answers to the questions are as follows: 11. What is the amount of current assets and long-term assets that you have? 12. Calculate the current ratio. Using the rule of the greatest is this a good or bad ratio