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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, who graduated
You are a summer intern at the office of a local tax preparer. To test your basic knowledge of financial statements, your manager, who graduated from your alma mater 2 years ago, 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 4.19 million shares outstanding, calculate EPS and additions to retained earnings. 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 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.) Accounts Depreciation expense General and administrative expenses Sales Sales expenses Cost of goods sold Lease expense Interest expense ($000,000) 24.13 22.81 345.52 18.17 225.45 4.04 3.32
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