Recent financial statements for Madison Company follow: Madison Company Balance Sheet June 30 Assets Current assets: Cash Accounts receivable, net Merchandise inventor Prepaid expenses $ 22,000 230,000 360,000 9,000 Total current assets Plant and equipment, net 621,000 900,000 Total assets $1,521,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% $ 220,000 330,000 Total liabilities Stockholders' equity: 550,000 Common stock, $10 par value Retained earnings $160,000 811,000 Total stockholders' equity 971,000 Total liabilities and stockholders' equity $1,521,000 Madison Company Income Statement For the Year Ended June 30 Sales Cost of goods sold $2,660,000 1,435,000 Gross margin Selling and administrative expenses 1,225,000 560,000 Net operating income Interest expense 665,000 36,300 Net income before taxes Income taxes 628,700 188,610 Net income $ 440,090