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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
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 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 35% tax rate, calculate taxes paid and net profits after taxes. c. Assuming a dividend of $1.05 per share with 4.16 million shares outstanding, calculate EPS and additions to retained earnings. $ $ $ Name of Company Income Statement ($000,000) 1. Sales 2. Less: Cost of goods sold Gross profits Less: Operating expenses 3. Depreciation expense 4. General and administrative expenses Sales expense 6. Lease expense Total operating expense Operating profits (EBIT) 7. Less: Interest expense Net profits before taxes 5. $ $ b. Complete the income statement, from the net profits before taxes line to the net profits after taxes line, below: (Round to two decimal places.) Name of Company Income Statement ($000,000) Cont'd Net profits before taxes $ Less: Taxes (35%) Net profits after taxes $ c. The firm's EPS is $ (Round to the nearest cent.) The firm's additions to retained earnings are $ million. (Round to two decimal places.) Data Table (Click the icon here spreadsheet.) in order to copy the contents of the data table below into a Accounts Depreciation expense General and administrative expenses Sales Sales expenses Cost of goods sold Lease expense Interest expense ($000,000) 24.14 22.32 344.57 17.92 254.54 3.88 2.41
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