Direct and Indirect Methods

The comparative balance sheets and income statement of Piura Manufacturing follow.

Piura Manufacturing Comparative Balance Sheets For the Years Ended June 30, 20Xland 20X2 20X1 20X2 Assets Cash $ 72,000 $ 146,400 Accounts receivable 44,000 48,000 Inventory 64,000 44,000 Plant and equipment 104,000 112,000 Accumulated depreciation (52,000) (48,000) Land 20,000 20,000 Total assets $252,000 $ 322,400 Liabilities and equity Accounts payable $ 32,000 $ 48,000 Wages payable 4,000 2,400 Bonds payable 24,000 16,000 Preferred stock (no par) 4,000 12,000 Common stock 30,000 36,000 Paid-in capital in excess of par 50,000 76,000 Retained earnings 108,000 132,000 Total liabilities and equity $252,000 $ 322,400 Piura Manufacturing Income Statement For the Year Ended June 30, 20X2 Sales $ 320,000 Cost of goods sold (200,000 Gross margin $ 120,000 Operating expenses (88,000 Net income $ 32,000