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C https//cours Aa Aa 3. Income statement The income statement, also known as the profit and loss (P8L) statement, provides a snapshot of the finanial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and Consider the following scenario: Fuzzy Button Clothing Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year Fuzzy Button is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and 1. taxes (EBIT) 2. The company's operating costs (excluding depreciation and amortization remain at 80% of net sales, and its depreciation and amortization expenses remain constant from year to year The company's tax rate remains constant at 40% of its pre-tax income or eamings before taxes (EBT) 3. 4. In Year 2, Fuzzy Button expects to pay $150,000 and $267,750 of preferred and common stock dividends, respectively 02 O Type here to search Complete the Year 2 income statement data for Fuzzy Button, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar Fuzzy Button Clothing Company Income Statement for Year Ending December 31 Year 2 Year 1 (Forecasted) Net sales $10,000,000 Less: Operating costs, except depreciation and amortization 8,000,000 400,000 Less: Depreciation and amortization expenses 400,000 Operating income (or EBIT Less: Interest expense $1,600,000 160,000 Pre-tax income (or EBT) 1,440,000 Less: Taxes (40%) 576,000 Earnings after taxes $864,000 Less: Preferred stock dividends 150,000 Earnings available to common shareholders 714,000 Less: Common stock dividends 216,000 Contribution to retained earnings $498,000 $653,250 Given the results of the previous income statement calculations, complete the following statements: Type here to search ace r6 F8 F10 F11 F12 PtSc ins Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Fuzzy Button has 10,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. Q from If Fuzzy Button has 200,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change inYear 1 to in Year 2. Fuzzy Button's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. Itis to say that Fuzzy Button's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual of the item reported in the income contribution to retained earnings, $498,000 and $653,250, respectively. This is because statement involve payments and receipts of cash. Grade It Now Save & Continue rights eserved O Type here to search er