2020 Income Statement Year Net Revenue - Cost of Goods Sold Depreciation Expense EBIT - Interest Expense Income Before Taxes Tax Expense Net Income 2019 Dividend Balance Sheet Year (end of) 2019 140,000 70,000 9,000 61,000 10,500 50,500 10,605 39,895 9,974 2019 2020 2019 2020 Assets Current Assets Cash and Equivalents Accounts Receivable Inventory Fixed Assets, Net Total Assets 10,000 25,000 12,000 165,000 212,000 21,000 95,000 116,000 Liabilities Current Liabilities Accounts Payable Long-term Debt Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders Equity 44,000 52.000 96,000 Accounts Payable Accounts Receivable Additional Paid-in Capital Cash Common Stock Cost of Goods Sold Depreciation Dividends per share Goodwill Interest Expense Inventory Long-Term Debt Net Property, Plant & Equipment Notes Payable Research & Development Expense Retained Earnings Revenue Selling General & Admin Expense Shares Outstanding Treasury Stock 2019 $ 7,000 5,000 4,000 8,577 3,107 48,464 1,315 1.53 18.051 1,200 8.871 2018 $ 6,780 4,685 4.000 5.654 3,107 47,594 1,244 1.28 19.121 1,100 8,101 26,500 4.200 1.847 25,311 3,770 1.747 23.045 59,000 3,024 1,280 (4,200) 61,200 3,200 1,170 (6,500) Tax Rate = 30% Note that a reduction in Goodwill would be similar to Depreciation Expense in a firm's Operating Cash Flow. 2 A. Construct Income Statements for 2018 and 2019 (8 points) 2019 2018 2B. Construct Balance Sheets for 2018 and 2019 (10 points). Assets Liabilities and Owners' Equity 2019 2018 2019 2018 2C. Construct a 2019 Statement of Cash Flows (Goodwill reduction is a noncash expense) (12 points). 2020 Income Statement Year Net Revenue - Cost of Goods Sold Depreciation Expense EBIT - Interest Expense Income Before Taxes Tax Expense Net Income 2019 Dividend Balance Sheet Year (end of) 2019 140,000 70,000 9,000 61,000 10,500 50,500 10,605 39,895 9,974 2019 2020 2019 2020 Assets Current Assets Cash and Equivalents Accounts Receivable Inventory Fixed Assets, Net Total Assets 10,000 25,000 12,000 165,000 212,000 21,000 95,000 116,000 Liabilities Current Liabilities Accounts Payable Long-term Debt Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders Equity 44,000 52.000 96,000 Accounts Payable Accounts Receivable Additional Paid-in Capital Cash Common Stock Cost of Goods Sold Depreciation Dividends per share Goodwill Interest Expense Inventory Long-Term Debt Net Property, Plant & Equipment Notes Payable Research & Development Expense Retained Earnings Revenue Selling General & Admin Expense Shares Outstanding Treasury Stock 2019 $ 7,000 5,000 4,000 8,577 3,107 48,464 1,315 1.53 18.051 1,200 8.871 2018 $ 6,780 4,685 4.000 5.654 3,107 47,594 1,244 1.28 19.121 1,100 8,101 26,500 4.200 1.847 25,311 3,770 1.747 23.045 59,000 3,024 1,280 (4,200) 61,200 3,200 1,170 (6,500) Tax Rate = 30% Note that a reduction in Goodwill would be similar to Depreciation Expense in a firm's Operating Cash Flow. 2 A. Construct Income Statements for 2018 and 2019 (8 points) 2019 2018 2B. Construct Balance Sheets for 2018 and 2019 (10 points). Assets Liabilities and Owners' Equity 2019 2018 2019 2018 2C. Construct a 2019 Statement of Cash Flows (Goodwill reduction is a noncash expense) (12 points)