You are a summer intern at the office of a local tax preparer. To test your basic knowledge of financial statements, your manager gives you the following list of accounts LOADING... and asks you to prepare a simple income statement using those accounts.

a. Arrange the accounts into a well-labeled income statement. Make sure you label and solve for gross profits, operating profits, and net profits before taxes.

b. Using a 21% tax rate, calculate taxes paid and net profits after taxes.

c. Assuming a dividend of $1.08 per share with 4.16 million shares outstanding, calculate EPS and additions to retained earnings.

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Part 1

a. Complete the income statement, down to the net profits before taxes line, below:(Select the account names from the drop-down menus and round the amounts to two decimal places.)

Name of Company

Income Statement ($000,000)

1.

$

2.Gross profits

$

Less: Operating expenses

3.

$

4.

5.

6.

Total operating expense

$

Operating profits (EBIT)

$

7.

Net profits before taxes

$

Click the icon here in order to copy the contents of the data table below into a spreadsheet.)

Accounts

($Millions)

Depreciation expense

25.12

General and administrative expenses

21.32

Sales

345.32

Sales expenses

17.01

Cost of goods sold

255.77

Lease expense

4.24

Interest expense

2.48