Lydex Company Comparative Balance Sheet

This Year

Last Year

Assets

Current assets:

Cash

$

870,000

$

1,110,000

Marketable securities

0

300,000

Accounts receivable, net

2,340,000

1,440,000

Inventory

3,510,000

2,100,000

Prepaid expenses

240,000

180,000

Total current assets

6,960,000

5,130,000

Plant and equipment, net

9,340,000

8,960,000

Total assets

$

16,300,000

$

14,090,000

Liabilities and Stockholders' Equity

Liabilities:

Current liabilities

$

3,920,000

$

2,800,000

Note payable, 10%

3,600,000

3,000,000

Total liabilities

7,520,000

5,800,000

Stockholders' equity:

Common stock, $70 par value

7,000,000

7,000,000

Retained earnings

1,780,000

1,290,000

Total stockholders' equity

8,780,000

8,290,000

Total liabilities and stockholders' equity

$

16,300,000

$

14,090,000

Lydex Company Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales (all on account)	$	15,770,000	$	12,680,000
Cost of goods sold		12,616,000		9,510,000
Gross margin		3,154,000		3,170,000
Selling and administrative expenses		1,594,000		1,568,000
Net operating income		1,560,000		1,602,000
Interest expense		360,000		300,000
Net income before taxes		1,200,000		1,302,000
Income taxes (30%)		360,000		390,600
Net income		840,000		911,400
Common dividends		350,000		455,700
Net income retained		490,000		455,700
Beginning retained earnings		1,290,000		834,300
Ending retained earnings	$	1,780,000	$	1,290,000

2.	You decide next to assess the company