Question 1 - The Income Statement Using Figure 2-1 on page 15 as your Income Statement form, review the following facts and prepare an Income Statement. Charlie's Chairs has the following expenses and sales revenue for the year: Cost of Goods Sold ----- $6,358,000 Income Tax Expense ---- $458,000 Interest Expense ---- $684,000 Wages Expense --- $2,500,000 Rent ----$500,000 Selling Expenses ---- $1,000,000 Depreciation ---- $300,000 Amortization ----$75,000 Sales Revenue ---- $13,125,000 Question 2 - The Balance Sheet Using Figure 2-5 on page 25 as your Balance Sheet form, review the following facts and prepare a Balance Sheet. Donna's Realty Company has the following assets and liabilities: Cash ---- $2,960,000 Office Equipment ---- $950,000 Office Salaries Payable ---- $220,000 Donna Dee's Capital ---- $1,000,000 Office Supplies in Inventory ---- $75,000 Accounts Payable ---- $1,065,000 Buildings ---- $3,030,000 Accumulated Depreciation (Buildings) ---- $, 1,000,000 Accounts Receivable ---- $1,250,000 Automobiles ---- $50,000 Bank Loans ---- $865,000 Mortgages ---- $1,850,000 Retained Earnings ---- $2,315,000 Revenues $8,000 Expenses Cost of goods sold Gross profit 25289 $2,000 $6,000 Operating expenses Wages $1,000 Rent 300 Selling expense Depreciation 400 500 2 Amortization 300 Total operating expense Operating profit or profit before interest and taxes $2,500 $3,500 Interest expense 200 Profit before taxes $3,300 Income tax expense $1,320 Net income nos $1,980 Figure 2-1 Bruce Company Income Statement, Year Ended 12/31/2012 Assets Current assets $300 300 (10) 600 $1,190 Cash Accounts receivable Less: Uncollectibles Inventory Total current assets Property, plant, and equipment Property Buildings Less: Accumulated depreciation Equipment Less: Accumulated depreciation Total property, plant, and equipment Other assets Automobiles $5,000 4,000 (1,000) 3,000 (1,000) $10,000 $4,500 1,000 Patents $5,500 $16,690 $500 700 900 $2,100 Total other assets Total assets Liabilities and shareholders' equity Current liabilities Accounts payable Wages Short-term debt Total current liabilities Long-term liabilities Bank loans Mortgages Total long-term liabilities Shareholders' equity Contributed capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $4,000 5,000 $7,000 $5,000 2,590 $7,590 $16,690 Figure 2-5 Bruce Company Balance Sheet, Year End 12/31/12