The following information is taken from the 2017 annual report of Carla, Inc. Carlas fiscal year ends December 31 of each year. Carlas December 31, 2017, balance sheet is as follows.

Carla, Inc. Balance Sheet December 31, 2017
Assets
Cash		$460
Inventory		1,790
Total current assets		2,250
Plant and equipment		1,900
Accumulated depreciation		(152)
Total assets		3,998
Liabilities
Bonds payable (net of discount)		$1,426
Stockholders equity
Common stock		1,500
Retained earnings		1,072
Total liabilities and stockholders equity		$3,998

Note X: Long Term Debt: On January 1, 2018, Carla issued bonds with face value of $1,500 and a coupon rate equal to 10%. The bonds were issued to yield 12% and mature on January 1, 2023. Additional information concerning 2018 is as follows.

1.		Sales were $3,600, all for cash.
2.		Purchases were $2,200, all paid in cash.
3.		Salaries were $700, all paid in cash.
4.		Property, plant, and equipment was originally purchased for $1,900 and is depreciated straight-line over a 25-year life with no salvage value.
5.		Ending inventory was $1,800.
6.		Cash dividends of $110 were declared and paid by Carla.
7.		Ignore taxes.
8.		The market rate of interest on bonds of similar risk was 12% during all of 2018.
9.		Interest on the bonds is paid semiannually each June 30 and December 31.

A. Prepare an income statement for the year ending December 31, 2018. Assume semiannual compounding of the bond interest.

B. Prepare a balance sheet for Carla, Inc. at December 31, 2018. Assume semiannual compounding of the bond interest. (List Current Assets in order of liquidity.)

C. Compute debt to assets ratio and times interest earned ratio for 2017 and 2018. Carlas net income in 2017 was $570 and interest expense was $169.