Current assets:. Cash Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) Assets Accounts receivable. Inventory. Prepaid expenses. Total current assets. Plant and equipment, net. Total assets....... Liabilities and Stockholders' Equity Year 2 Year 1 $ 40 $ 100 120 130 180 170 20 20 360 420 940 860 $1,300 $1.280 Current liabilities: Accounts payable.. Accrued liabilities Notes payable, short term Total current liabilities. Bonds payable. Total liabilities. Stockholders' equity: $ 170 $ 160 80 80 40 40 290 280 110 150 400 430 Preferred stock, $100 par value, 10%. 100 100 Common stock, $1 par value. 100 100 Additional paid-in capital--common stock. 200 200 Retained earnings....... 500 450 Total stockholders' equity. 900 850 $1.300 $1.280 Total liabilities & stockholders' equity. Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) Sales (all on account).... $1,300 Cost of goods sold. 720 Gross margin... 580 Selling and administrative expense. 420 Net operating income. 160 Interest expense. 17 Net income before taxes.... 143 Income taxes (30%). 43 $100 Net income