Astro Inc.: Income Statement
Problem 12- 6 Statement of — Direct Method
The income statement for Astro Inc. for 2010 is as follows: For the Year Ended December 31, 2010
Sales revenue $ 500,000
Cost of goods sold 400,000
Gross profit $ 100,000
Operating expenses 180,000
Loss before interest and taxes $ ( 80,000)
Interest expense 20,000
Net loss $( 100,000)
Presented here are comparative balance sheets: December 31 2010 2009
Cash $ 95,000 $ 80,000
Accounts receivable 50,000 75,000
Inventory 100,000 150,000
Prepayments 55,000 45,000
Total current assets $ 300,000 $ 350,000
Land 475,000 400,000
Plant and equipment 870,000 800,000
Accumulated depreciation ( 370,000) ( 300,000) Total long- term assets $ 975,000 $ 900,000 Total assets $ 1,275,000 $ 1,250,000
Accounts payable $ 125,000 $ 100,000 Other accrued liabilities 35,000 45,000 Interest payable 15,000 10,000
Total current liabilities $ 175,000 $ 155,000 Long- term bank loan payable $ 340,000 $ 250,000
Common stock $ 450,000 $ 400,000
Retained earnings 310,000 445,000
Total stockholders’ equity $ 760,000 $ 845,000
Total liabilities and stockholders’ equity $ 1,275,000 $ 1,250,000
Other information is as follows: a. Dividends of $ 35,000 were declared and paid during the year. b. Operating expenses include $ 70,000 of depreciation.
c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash.
Cash also was received from additional bank loans.
The president has asked you some questions about the year’s results. He is disturbed with the $ 100,000 net loss for the year. He notes, however, that the cash position at the end of the year is improved. He is confused about what appear to be conflicting signals: “ How could we have possibly
The income statement for Astro Inc. for 2010 is as follows: For the Year Ended December 31, 2010
Sales revenue $ 500,000
Cost of goods sold 400,000
Gross profit $ 100,000
Operating expenses 180,000
Loss before interest and taxes $ ( 80,000)
Interest expense 20,000
Net loss $( 100,000)
Presented here are comparative balance sheets: December 31 2010 2009
Cash $ 95,000 $ 80,000
Accounts receivable 50,000 75,000
Inventory 100,000 150,000
Prepayments 55,000 45,000
Total current assets $ 300,000 $ 350,000
Land 475,000 400,000
Plant and equipment 870,000 800,000
Accumulated depreciation ( 370,000) ( 300,000) Total long- term assets $ 975,000 $ 900,000 Total assets $ 1,275,000 $ 1,250,000
Accounts payable $ 125,000 $ 100,000 Other accrued liabilities 35,000 45,000 Interest payable 15,000 10,000
Total current liabilities $ 175,000 $ 155,000 Long- term bank loan payable $ 340,000 $ 250,000
Common stock $ 450,000 $ 400,000
Retained earnings 310,000 445,000
Total stockholders’ equity $ 760,000 $ 845,000
Total liabilities and stockholders’ equity $ 1,275,000 $ 1,250,000
Other information is as follows: a. Dividends of $ 35,000 were declared and paid during the year. b. Operating expenses include $ 70,000 of depreciation.
c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash.
Cash also was received from additional bank loans.
The president has asked you some questions about the year’s results. He is disturbed with the $ 100,000 net loss for the year. He notes, however, that the cash position at the end of the year is improved. He is confused about what appear to be conflicting signals: “ How could we have possibly