Repeat questions 5 and 6 with the goal of calculating the lowest net income that can be reported within the constraints of GAAP. What should be reported as the total assets under this lowincome scenario? (Hint: Prepare an income statement and balance sheet similar to those in Exhibits 1 and 2.)

liabilities amount amount Assets amount amount shareholders equity capital assets common shares 1150000 4500000 production equipment retaines earnings 3610684 (500000) less: acc. depreciation total 4760684 net asset 4000000 current asset long term liabilities cash 512863 bonds payable 450000 734580 account receivbale other 100000 620000 impalnts and other inventory total $550000 444416 lotion inventory current liabilities other 8825 Accounts payable 250000 total 2020684 accrued liabilities 460000 total $710000 $6020684 Total assets $6020684 total liability and shareholder equity Implants and Other Sales $4,500,000 Lotions Sales $2,500,000 Net Sales $7,000,000 Implants and Other Sales $2,500,000 Lotions Sales $1,792,000 Weigthed Average Total COGS $4,292,000 $2,708,000 Gross Margin Operating Expenses Bad Debts $7,420 1% Depreciation $500,000 General Selling Administration Exp $275,000 Interest $120,000 Supplies $65,000 Total Expenses $5,259.420 Net Income $1,740,580 liabilities amount amount Assets amount amount shareholders equity capital assets common shares 1150000 4500000 production equipment retaines earnings 3610684 (500000) less: acc. depreciation total 4760684 net asset 4000000 current asset long term liabilities cash 512863 bonds payable 450000 734580 account receivbale other 100000 620000 impalnts and other inventory total $550000 444416 lotion inventory current liabilities other 8825 Accounts payable 250000 total 2020684 accrued liabilities 460000 total $710000 $6020684 Total assets $6020684 total liability and shareholder equity Implants and Other Sales $4,500,000 Lotions Sales $2,500,000 Net Sales $7,000,000 Implants and Other Sales $2,500,000 Lotions Sales $1,792,000 Weigthed Average Total COGS $4,292,000 $2,708,000 Gross Margin Operating Expenses Bad Debts $7,420 1% Depreciation $500,000 General Selling Administration Exp $275,000 Interest $120,000 Supplies $65,000 Total Expenses $5,259.420 Net Income $1,740,580