Question #1

Question #2

The following income statement and balance sheet for The Athletic Attic are provided. THE ATHLETIC ATTIC Income Statement For the year ended December 31, 2015 Net sales Cost of goods sold $8,900,000 5,450,000 Gross profit 3,450,000 Operating expenses Depreciation expense Interest expense Income tax expense $1,600,000 210,000 50,000 360,000 Total expenses 2,220,000 Net income S 1,230,000 THE ATHLETIC ATTIC Balance Sheet December 31 2015 2014 Assets Current assets Cash Accounts receivable Inventory Supplies $164,000 $214,000 810,000 1,405,000 1,075,000 85,000 790,000 110,000 Long-term assets Equipment Less: Accumulated depreciation 1,150,000 ,150,000 (420,000) (210,000) Total assets $3,199,000 $3,124,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable $115,000 91,000 5,000 31,000 40,000 600,000 700,000 Long-term liabilities: Notes payable 600,000 Stockholders' equity: Common stock Retained earnings 700,000 1,744,000 1,697,000 Total liabilities and stockholders' equity $3,199,000 $3,124,000