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Let's carefully review and verify each component of Joyner Company's income statement and balance sheet as given:
### Income Statement for Year 2
1. Sales: [tex]$915,000 2. Cost of Goods Sold: $[/tex]503,250
- Gross Margin:
[tex]\[ \text{Sales} - \text{Cost of Goods Sold} = 915,000 - 503,250 = 411,750 \][/tex]
3. Selling and Administrative Expenses: [tex]$330,000 - Net Operating Income: \[ \text{Gross Margin} - \text{Selling and Administrative Expenses} = 411,750 - 330,000 = 81,750 \] 4. Nonoperating Items: - Gain on Sale of Equipment: $[/tex]7,000
- Income before Taxes:
[tex]\[ \text{Net Operating Income} + \text{Gain on Sale of Equipment} = 81,750 + 7,000 = 88,750 \][/tex]
5. Income Taxes: [tex]$26,625 - Net Income: \[ \text{Income before Taxes} - \text{Income Taxes} = 88,750 - 26,625 = 62,125 \] ### Balance Sheet Amounts at the End of Year 2 1. Cash and Cash Equivalents: $[/tex]32,925
2. Accounts Receivable: [tex]$204,000 3. Inventory: $[/tex]286,000
4. Prepaid Expenses: [tex]$8,000 - Total Current Assets: \[ \text{Cash and Cash Equivalents} + \text{Accounts Receivable} + \text{Inventory} + \text{Prepaid Expenses} = 32,925 + 204,000 + 286,000 + 8,000 = 530,925 \] 5. Property, Plant, and Equipment: $[/tex]520,000
6. Less: Accumulated Depreciation: [tex]$130,000 So, the key amounts from both the income statement and the balance sheet are verified. Here’s a clear step-by-step recap: 1. Sales were $[/tex]915,000.
2. The Cost of Goods Sold was [tex]$503,250, resulting in a Gross Margin of $[/tex]411,750.
3. Selling and Administrative Expenses totaled [tex]$330,000, leading to a Net Operating Income of $[/tex]81,750.
4. Gain on Sale of Equipment added [tex]$7,000, bringing the Income before Taxes to $[/tex]88,750.
5. Income Taxes were [tex]$26,625, resulting in a Net Income of $[/tex]62,125.
6. The Balance Sheet quantities at the end of Year 2 include:
- Cash and Cash Equivalents: [tex]$32,925 - Accounts Receivable: $[/tex]204,000
- Inventory: [tex]$286,000 - Prepaid Expenses: $[/tex]8,000
- Total Current Assets: [tex]$530,925 - Property, Plant, and Equipment: $[/tex]520,000
- Accumulated Depreciation: $130,000
These verifications and detailed calculations match perfectly with the given data.
### Income Statement for Year 2
1. Sales: [tex]$915,000 2. Cost of Goods Sold: $[/tex]503,250
- Gross Margin:
[tex]\[ \text{Sales} - \text{Cost of Goods Sold} = 915,000 - 503,250 = 411,750 \][/tex]
3. Selling and Administrative Expenses: [tex]$330,000 - Net Operating Income: \[ \text{Gross Margin} - \text{Selling and Administrative Expenses} = 411,750 - 330,000 = 81,750 \] 4. Nonoperating Items: - Gain on Sale of Equipment: $[/tex]7,000
- Income before Taxes:
[tex]\[ \text{Net Operating Income} + \text{Gain on Sale of Equipment} = 81,750 + 7,000 = 88,750 \][/tex]
5. Income Taxes: [tex]$26,625 - Net Income: \[ \text{Income before Taxes} - \text{Income Taxes} = 88,750 - 26,625 = 62,125 \] ### Balance Sheet Amounts at the End of Year 2 1. Cash and Cash Equivalents: $[/tex]32,925
2. Accounts Receivable: [tex]$204,000 3. Inventory: $[/tex]286,000
4. Prepaid Expenses: [tex]$8,000 - Total Current Assets: \[ \text{Cash and Cash Equivalents} + \text{Accounts Receivable} + \text{Inventory} + \text{Prepaid Expenses} = 32,925 + 204,000 + 286,000 + 8,000 = 530,925 \] 5. Property, Plant, and Equipment: $[/tex]520,000
6. Less: Accumulated Depreciation: [tex]$130,000 So, the key amounts from both the income statement and the balance sheet are verified. Here’s a clear step-by-step recap: 1. Sales were $[/tex]915,000.
2. The Cost of Goods Sold was [tex]$503,250, resulting in a Gross Margin of $[/tex]411,750.
3. Selling and Administrative Expenses totaled [tex]$330,000, leading to a Net Operating Income of $[/tex]81,750.
4. Gain on Sale of Equipment added [tex]$7,000, bringing the Income before Taxes to $[/tex]88,750.
5. Income Taxes were [tex]$26,625, resulting in a Net Income of $[/tex]62,125.
6. The Balance Sheet quantities at the end of Year 2 include:
- Cash and Cash Equivalents: [tex]$32,925 - Accounts Receivable: $[/tex]204,000
- Inventory: [tex]$286,000 - Prepaid Expenses: $[/tex]8,000
- Total Current Assets: [tex]$530,925 - Property, Plant, and Equipment: $[/tex]520,000
- Accumulated Depreciation: $130,000
These verifications and detailed calculations match perfectly with the given data.
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