Sales revenue Less: Sales Discounts Sales Returns Net sales revenue Less: Cost of Sales Gimli Axe Makers Income Statement For the Year Ended December 31, 2008 $19,750,000 $407,000 $101,000 $508,000 $19,242,000 Gross Profit Operating expenses: Selling Expenses Amortization General Expenses Operating income (EBIT) Earnings Before Taxes Income Tax Eamings After Taxes 40% $1,440,000 $66,000 $2,978,900 $4,484,900 $15,000 $15,000 $6,000 Income Tax Eamings After Taxes 40% Gimli Axe Makers Statement of Retained Eamings For the Year Ended December 31, 2008 Beginning Retained Eamings Add: Net Income (Loss) Less: Dividends Change in Retained Eamings $6,000 S $24,740 $ $ 1,200,000 Number of Common Shares: 1,500,000 Selling Expenses 1,440,000 Cash Accounts receivable Prepaid expenses Cash Equiv's Accounts payable Notes payable Mortgage Payable 381,000 5,678,400 6,400 199,000 4,266,000 155,000 Loan From shareholder 700,000 1,200,000 Common stock 1,500,000 Beginning Retained eamings 524,740 Plant and equipment 3,056,000 Beginning Accumulated Amortization 400,000 Beginning Inventory 1,580,000 Sales Returns 101,000 Freight In 267,000 General Expenses 2,978,900 Ending Inventory 1,510,000 Sales discounts 407,000 Purchases 8,940,000 Purchase Discounts 205,000 Purchase R&A's 65.000 Interest Expense 15,000 Dividends 1,200,000 Income Tax rate 40% Dividends 1,200,000 Income Tax rate 40% Market Price of Shares 5.50 Sales revenue 19750000 A Balance Sheet As at December 31, 2008 Current Assets Current Liabilities Cash $381,000 Accounts payable $4,266,000 Accounts receivable 5,678,400 155,000 Inventory 1,510,000 Long-Term Liabilities Prepaid expenses 6,400 Loan From shareholder 700,000 Cash Equiv's 199,000 Mortgage Payable 1,200,000 Total Current Assets $7,774,800 Total Liabilities 6,321,000 Capital Assets Shareholders' Equity Plant and equipment 3,056,000 Common stock 1,500,000 466,000 Net plant and equipment Total shareholders' equi Total liabilities and 1,500,000 Total assets $7,774,800 shareholders' equity $7,821,000