3. Income statement The income statement, also known as the profit and loss (P&L) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition Consider the following scenario: Cute Camel Woodcraft Company's income statement reports data for its first year f operation. The firm's next year EO would ike sales to increase by 25% 1. cute camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT) 2. The company's operating costs (excluding depreciation and amortization) remain at 70 of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Cute Camel expects to pay $100,000 and $1,025,100 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar Cute Camel Woodcraft CompanyIncome Statement for Year Ending December 31 Year 1 Year 2 (Forecasted) Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) Less: Interest expense Pre-tax income (or EBT) Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings $15,000,000 10,500,000 600,000 $3,900,000 390,000 3,510,000 1,404,000 $2,106,000 100,000 2,006,000 842,400 $1,163,600 600,000 $1,437,650 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from It isto say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual in annual dividends. in Year 1 to in Year 2. in Year 1 to in Year 2. It is of the item reported in the income contribution to retained earnings, $1,163,600 and $1,437,650, respectively. This is because statement involve payments and receipts of cash