A Income Statement for 08 has to be created. Based on the following information,

Question

A Income Statement for 08 has to be created. Based on the following information, compile an Income statement for the year ending '08 1) Volume for the year totaled 5MM gallons. Sales price was $1.80 per gallon 2) Corporation, in '08, purchased equipment for $150M. Equipment will be depreciated via 5 year MACRS method 3) Land purchased in 1990 for $200M now has an appraised value of $800M 4) Company's Gross Profit Percentage for year ending '07 was 7%; for year ending '08 the Gross Profit Percentage was 8% 5) Company borrowed money from First Bank on 6/30/08. The loan totaled $850M. The interest rate was fixed at 9%. 6) Due to price increases ('08 vs. '07); Accounts Receivable have increased by $100M 7) Company has no Preferred Stock. The company did elect to pay a dividend of $100M to the Common Shareholders. There are 50M shares of common stock outstanding as of 12/31/08. 8) Corporation, in '06 , purchased equipment for $75M. This equipment will be depreciated via 7 year MACRS. 9) Company was in the 35% tax bracket in '06 & '07. In '08, the company is in the 40 % tax bracket. 10) One of the owners borrowed $150M from the business on 9/30/08. Terms are 5 years, with interest only to be paid in years 1 & 2. The agreed interest rate is 10%. 11) Company repaid $200M on long term debt in '08. Interest relating to this debt totaled $15M. 12) Selling & General Administrative Expenses totaled 4.5% of Sales 13) Company was unable to collect Accounts Receivable totaling $50M. They have elected to treat this as a bad debt expense in '08. 14) Company was able to collect $20M from a bad debt expense (written off in '06) in '08. A Income Statement for 08 has to be created. Based on the following information, compile an Income statement for the year ending '08 1) Volume for the year totaled 5MM gallons. Sales price was $1.80 per gallon 2) Corporation, in '08, purchased equipment for $150M. Equipment will be depreciated via 5 year MACRS method 3) Land purchased in 1990 for $200M now has an appraised value of $800M 4) Company's Gross Profit Percentage for year ending '07 was 7%; for year ending '08 the Gross Profit Percentage was 8% 5) Company borrowed money from First Bank on 6/30/08. The loan totaled $850M. The interest rate was fixed at 9%. 6) Due to price increases ('08 vs. '07); Accounts Receivable have increased by $100M 7) Company has no Preferred Stock. The company did elect to pay a dividend of $100M to the Common Shareholders. There are 50M shares of common stock outstanding as of 12/31/08. 8) Corporation, in '06 , purchased equipment for $75M. This equipment will be depreciated via 7 year MACRS. 9) Company was in the 35% tax bracket in '06 & '07. In '08, the company is in the 40 % tax bracket. 10) One of the owners borrowed $150M from the business on 9/30/08. Terms are 5 years, with interest only to be paid in years 1 & 2. The agreed interest rate is 10%. 11) Company repaid $200M on long term debt in '08. Interest relating to this debt totaled $15M. 12) Selling & General Administrative Expenses totaled 4.5% of Sales 13) Company was unable to collect Accounts Receivable totaling $50M. They have elected to treat this as a bad debt expense in '08. 14) Company was able to collect $20M from a bad debt expense (written off in '06) in '08.

Explanation / Answer

Income Statements is as follow:

Particulars Debit Particulars Credit   Sales 90,00,00,000 Bad Debts Recovered         20,00,000 Gross Profit (8%) 7,20,00,000 Intt Cost (95 of 850 M $)       76,50,000 Depreciation       60,00,000 Depreciation       30,00,000 Dividend 1,00,00,000 Intt Cost            3,37,500 Intt on long term debt       15,00,000 Selling Exp 4,05,00,000 Bad debts       50,00,000    Net Profit     -19,87,500

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