You are a newly-minded MBA who was hired as a GM (i.e. General Manager) in a small Canadian company. Both, the previous GM and the accountant left in a rush due to some unexpected issues. You have full access to all the accounting data, but the previous/departing accountant had no time to "put together" the balance sheet and income statement of the company.

The owner of the company, is asking (1) you how much money (specifically: Retained Earnings) does s/he has in his company.

S/he is also asking you to: construct (2) a Balance Sheet and (3) an Income Statement and tell him: (3) What is the Gross Margin? (4) What are the Earnings Before Interest and Income Tax (called EBIT)? (5) What are the Earnings Before Income Tax? (6) What is the Net Income? and to

(7) Describe the vital connections between the income statement (IS) and the balance sheet (BS)

You have available the following elements/amounts (in thousands of Can$) from the accounting system: Cash: $3,500; Accounts Receivable: $5,000; Inventory: $7,800; Prepaid Expenses: $900. Also.... Fixed Assets: $19,500 and Accumulated Depreciation: $6,825 Financing/Liability.... Accounts Payable: $1,500; Accrued Expenses Payable: $2,400; Income Taxes Payable: $75; Short-Term Notes Payable: $4,000 and Long-Term Notes Payable: $6,000 Owners Equity: Capital Stock: $4,000 Revenues from Sales: $52,000; Cost of Goods Sold (expenses): $31,200 Sales, Administration and General Expenses: $15,600 Depreciation Expenses: $1,650 Interest Expenses: $750 Income Tax Expenses: $900 Please answer the owner's questions in a brief business memo, no longer than 3 pages.