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Income statement for Year Ended Dec 31, 2009 Firm A Firm B Sales $1,000,000 $1,000,000 Cost of goods sold 700,000 700,000 Gross profit 300,000 300,000
Income statement for Year Ended Dec 31, 2009 Firm A Firm B Sales $1,000,000 $1,000,000 Cost of goods sold 700,000 700,000 Gross profit 300,000 300,000 Other expenses Selling and administrative 120,000 120,000 Depreciation 10,000 10,000 Interest expense 20,000 5,000 Earnings before taxes 150,000 150,000 Income tax expense 75,000 75,000 Net Income 75,000 75,000 Changes in Balance Sheet Accounts Dec 31, 2008 to Dec 31, 2009 Cash and cash equivalents $ 0 $+10,000 Accounts receivable +40,000 +5,000 Inventory +40,000 -10,000 Property, plant and equipment +20,000 +70,000 Less accumulated depreciation (+10,000) (+30,000) Total Assets $90,000 $+45,000 Accounts payable $-20,000 $ -5,000 Notes payable(current) +17,000 +2,000 Long-term debt +20,000 -10,000 Deferred taxes(noncurrent) + 3,000 +18,000 Capital, Stock - - Retained earnings +70,000 +40,000 Total Liabilities and Equity $+90,000 $+45,000
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