Recent financial statements for Madison Company are given below. Account balances at the beginning of the company$$s fiscal year were accounts receivable, $$222,000,$ and inventory, $$415,000.$ All sales were on account.

MADISON COMPANY

Balance Sheet

June $30$

Assets

Current assets:

Cash $ $31,000$

Accounts receivable, net $203,000$

Merchandise inventory $435,000$

Prepaid expenses $7,000$

Total current assets $676,000$

Property and equipment, net $780,000$

Total assets $ $1,456,000$

Liabilities and Shareholders$$ Equity

Liabilities:

Current liabilities $ $260,000$

Bonds payable, $10\%300,000$

Total liabilities $560,000$

Shareholders$$ equity:

Common shares, $28,000$ $ $100,000$

Retained earnings $796,000$

Total shareholders$$ equity $896,000$

Total liabilities and shareholders$$ equity $ $1,456,000$

MADISON COMPANY

Income Statement

For the Year Ended June $30$

Sales $ $3,400,000$

Cost of goods sold $2,040,000$

Gross margin $1,360,000$

Selling and administrative expenses $1,120,000$

Operating income $240,000$

Interest expense $30,000$

Net income before taxes $210,000$

Income taxes $63,000$

Net income $ $147,000$