As a recently hired accountant for a small business, SMC, Inc., you are provided with last years balance sheet, income statement, and post-closing trial balance to familiarize yourself with the business. SMC,Inc. Balance Sheet December 31, 2015 Assets Cash ......................................................................................................... $34,500 Accounts receivable ................................................................................ 25,000 Inventory .................................................................................................. 10,000 Supplies ................................................................................................... 200 Total assets.............................................................................................. $69,700 Liabilities and StockholdersEquity Liabilities: SMC,Inc. IncomeStatement For theYearEndedDecember31,2015 Sales revenue .......................................................................................... $110,000 Rent revenue ........................................................................................... 1,000 Total revenues ......................................................................................... $111,000 Less cost of goods sold........................................................................... 60,000 Gross profit ........................................................................................... $ 51,000 Less operating expenses: Supplies expense ............................................................................. $ 400 Salaries expense .............................................................................. 22,000 Miscellaneous expense ................................................................... 4,100 26,500 Income before taxes................................................................................ $ 24,500 Less income taxes................................................................................... 3,675 Net income............................................................................................... $ 20,825 Earnings per share ( $20,825 / 10,000 shares) $ 2.08 Accounts payable ............................................................................. $12,000 Salaries payable ............................................................................... 1,000 Income taxes payable ...................................................................... 3,675 Total liabilities.......................................................................................... $16,675 Stockholdersequity: Capital stock (10,000 shares outstanding).................................... $25,000 Retained earnings ............................................................................ 28,025 Total stockholders equity ....................................................................... 53,025 Total liabilities and stockholders equity................................................ $69,700 SMC,Inc. Post-Closing TrialBalance December 31, 2015 Debits Credits Cash ......................................................................................................... $34,500 Accounts Receivable ............................................................................... 25,000 Inventory .................................................................................................. 10,000 Supplies ................................................................................................... Accounts Payable .................................................................................... 200 $12,000 Salaries Payable ...................................................................................... 1,000 Income TaxesPayable............................................................................. 3,675 Common Stock............................................................................................ 25,000 Retained Earnings ................................................................................... 28,025 Totals........................................................................................................ $69,700 $69,700 You are also given the following information that summarizes the business activity for the current year, 2016 a.Issued 10,000 additional shares of common stock for $25,000 cash on January 1st. b.Borrowed $10,000 on March 1, 2016, from Downtown Bank as a long-term loan. The interest rate onthe loan is 5% and Interest for the year is payable on January 1, 2017. c.Paid $9,000 cash on April1 to lease a building for one year. d.Received $4,800 on May 1 from a tenant for one years rent. e.Paid $3,600 on June 1 for a one-year insurance policy. f.Purchased $2,200 of supplies for cash on June 15th. g.Purchased inventory for $100,000 on account on July 1. h.August 1, sold inventory for $170,000 on account; cost of the merchandise sold was $90,000. i.Collected $110,000 cash from customers accounts receivable on August 20th. j.September 1, Paid $85,000 cash for inventories purchased earlier during the year. k.September 20th, paid $31,000 for sales reps salaries, including $1,000 owed at the beginning of 2016. l.Dividends for $9,500 were paid on October 20th. m.The income taxes payable at the beginning of 2016 were paid on November 15th. n.For adjusting entries, all prepaid expenses are initially recorded as assets, and all unearned revenues areinitially recorded as liabilities (this is just informational). o.At year-end, $850 worth of supplies are on hand. p.At year-end, an additional $6,500 of sales salaries are owed, but have not yet been paid. q.Prepare an adjusting entry to recognize the taxes owed for 2015. The corporate tax rate is 25% of theincome before income taxes.

Question:

Interpretive Question: What is your overall assessment of the financial health of SMC, Inc.?