The following is the December 31, 2010 balance sheet for the Epics Corporation:

Question

The following is the December 31, 2010 balance sheet for the Epics Corporation: Sales for 2010 were $3,000,000, with the cost of goods sold being 60% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm's tax rate is 40%.

A. Prepare an income statement.

Assets Cash Accounts Receivable Inventorv Total Current Assets $70,000 150,000 280.000 Liabilities Accounts Payable Notes Payable Bonds Payable Total Liabilities $100,000 120,000 300,000 $520,000 $ 500.000 Plant and Equipment Less: Accum. Deprec. 250,000 Net Plant and Equipment $ 1,000,000 $ 1,250,000 Equity Common Stock Paid In Capital Retained Earnings Total Equity Total Liab. & Equitv 300,000 200,000 480,000 $ 980,000 $ 1,500,000 Total Assets $1,500.000

Explanation / Answer

Income statement of Epics Corporation

For the year ended 31st Dec 2010

Shedule:

Operating expenses

Particulars Amount in $ Sales 3,000,000 Cost of Goods sold    1,800,000 Gross profit 1,200,000 Operating expenses 368,800 Operating profit 831,200 Non Operating Items 0 Income before tax 332,480 Income tax 498,720 Net Income

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