Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company's financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his sticks (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Jameson Reid to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Jameson has assembled the following information:

Sunset Boards currently pays out 50 percent of net income as dividends to Tad and the other original investors, and has a 20 percent tax rate. You are Jameson's assistant, and he has asked you to prepare the following:

Q.1 An income statement for 2015 and 2016.

2016 2015 Cost of goods sold S 205,480 S 267,856 31,237 33.456 Cash 58,989 67,909 Interest 13.554 16,980 42,897 54,890 55,897 Selling & Administrative 59,880 Accounts payable Fixed assets 258,976 319,177 Sales 423,000 498,990 28,907 21,098 Accounts receivable Notes payable 24,567 26,789 129,098 Long-term debt 143,456 61,235 Invento 43,567 New e 25,670