Basic Industries

Balance Sheet

for12/31/20XX

With Gary's help, Claude 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.

Assets

Current Assets

Cash

$52,400.00

Accounts receivable

$11,300.00

Inventory

$15,600.00

Total current assets

$79,300.00

Fixed assets

Property, plant and equipment

$80,000.00

Accumulated depreciation

$ (10,000.00)

Net fixed assets

$70,000.00

Total assets

$149,300.00

Liabilities and Owner's Equity

Current liabilities

Accounts payable

$5,300.00

Note payable to bank

$2,700.00

Deposits from customers

$6,000.00

Total current liabilities

$14,000.00

Long term mortgage

$50,000.00

Total liabilities

$64,000.00

Owner's Equity

Retained earnings

$85,300.00

Total Owners' Equity

$85,300.00

Total liability and equities

$149,300.00

Basic Industries

Income Statement

for year ending 12/31/20XX

Sales revenue

356,428

Less cost of goods sold

105,200

Gross margin

251,228

Less operating expenses

Marketing

30,000

Sales and administrative

30,000

Depreciation

10,000

Total operating expenses

70,000

Operating income

181,228

Less interest expense

6,000

Income before taxes

175,228

Income tax expense

40,000

Net income

To see if he really understands what's going on, Gary asked Claude the following questions.Claude answered most of them correctly, can you?

a.How much revenue did the business produce?

b.What costs did the business have for financing?

c.What can you turn into cash in one year?

d.What did it cost to make your product?

e.What is the value of everything the company owns?

f.How much profit did the company make?

g.How much is the business worth to Claude?

h.How much does the business need for its continuing operation?

i.What debts will take longer than a year to pay?

j.Can this business be considered liquid?

135,228