The income statement, also known as the profit and loss (P\&L) statement, provides a snapshot of the financial performance of a company uring a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income, statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financlal performance and condition. Consider the following scenario: Fuzzy Button Clothing Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Fuzzy Button is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 75% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or camings before taxes (EBT). 4. In Year 2, Fuzzy Button expects to pay $100,000 and $555,900 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Fuzzy Button, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Fuzzy Button Clothine Combanvincome Statement for Vear Endine naremhar 20 Given the results of the previous income statement caiculations, complete the following statements: - In Year 2, if Fuzzy Button has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. - If Fuzzy Button has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. - Fuzzy Button's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. - 1t is to say that Fuzzy Button's net infiows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $580,400 and $733,850, respectively. This is because of the items reported in the income statement involve payments and receipts of cash