4.2 Constructing income statements and balance sheets. Based on the information provided below, prepare the following financial statements for CompuStores, a company that assembles and distributes personal computers: a. An income statement for the calendar Year 0 b. A balance sheet on December 31, Year -1 c. A balance sheet on December 31, Year 0 1. Accounts receivable increased by $6,400,000 in Year 0 2. Profits in Year 0 were taxed at 40 percent 3. At the end of Year 0, inventories equaled 10 percent of the year's sales 4. The net book value of fixed assets at the end of Year -1 was $76 million 5. Cost of goods sold, other than the direct labor expenses related to the assem- bling of computers, equaled 70 percent of sales in Year 0 6. The average interest rate on short- and long-term borrowing in Year 0 was 10 percent of the amount of funds borrowed at the beginning of the year 7. Accounts receivable at the end of Year 0 equaled 12 percent of sales 8. Accounts payable at the end of Year -1 equaled $30 million 9. Depreciation expense was $9 million in Year 0 10. The company owed its employees $4 million at the end of Year -1; a year later, it owed them $1.81 million 11. Material purchased in Year O amounted to $228 million 12. Selling, general, and administrative expenses for Year 0 were $18 million 13. Fees related to a technical license amount to $4 million per year 14. Taxes payable in Year -1 equaled $6 million, and the company paid in advance the same amount on December 15, Year -1 15. The balance of long-term debt was $27 million at the end of Year -1, of which $4 million was due at year-end 16. Shares of common stocks were not issued and outstanding shares were not repurchased in Year 0 17. Direct labor expenses equaled 11.25 percent of sales 18. Repayment of long-term debt is $4 million per year 19. Inventories rose from $28 million at the end of Year -1 to $32 million at the end of Year 0 20. In Year O, one of the company's warehouses was enlarged at a cost of $14 million, which was partly financed with a $6 million long-term loan 21. Dividend payments for Year 0 were $9.36 million 22. Accounts payable at the end of Year 0 equaled 1.85 of a month of purchases 23. Equity capital at the end of Year -1 was $81 million 24. At the end of Year -1, the company had enough cash such that it could have immediately paid one-fourth of its accounts payable; at the end of Year 0, it could have paid only one-tenth 25. The company paid in advance $9.6 million of taxes on December 15, Year 0 26. The company's line of credit was $3 million at the end of Year -1. A year later it increased by two-thirds 27. In Year O, the company had a $2 million nonrecurrent loss related to the discontinuation of an old product line 28. The company prepaid $1.5 million on rent and insurance in Year -1 and $2.085 million a year later