Wally has provided the information below – and asked you to create an Income Statement and Balance Sheet for AndrewCo for the year ended December 31, 2019.Sales were $1,200,000Gross profit margin was 50%Operating margins were 10%The Bank of Toronto provided a loan on Jan 1, 2019 worth $300,000. The annual interest is 8% and is compounded annually. Interest only payments are needed – until the loan is due in 10 years, where a balloon payment for the full balance must be paid.The combined federal and provincial tax rates is 25%Wally knows that the ending cash balance in his company is 200,000.Accounts Receivables is 12% of salesInventory is 15% of salesAccounts Payable is 5% of salesAccrued expenses payable is 5.5% of salesCapital equipment purchases were made at the start of the year. These total $50,000. These depreciate at 10% per yearThe owner will provide all other capital in the form of equity financingWally has asked you to figure out his Selling General and Administrative expenses

The income statement is one of a company’s core financial statements that are prepared to find out…

Answered: Wally has provided the information…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wally has provided the information below – and asked you to create an Income Statement and Balance Sheet for AndrewCo for the year ended December 31, 2019.

Sales were $1,200,000
Gross profit margin was 50%
Operating margins were 10%
The Bank of Toronto provided a loan on Jan 1, 2019 worth $300,000. The annual interest is 8% and is compounded annually. Interest only payments are needed – until the loan is due in 10 years, where a balloon payment for the full balance must be paid.
The combined federal and provincial tax rates is 25%
Wally knows that the ending cash balance in his company is 200,000.
Accounts Receivables is 12% of sales
Inventory is 15% of sales
Accounts Payable is 5% of sales
Accrued expenses payable is 5.5% of sales
Capital equipment purchases were made at the start of the year. These total $50,000. These depreciate at 10% per year
The owner will provide all other capital in the form of equity financing
Wally has asked you to figure out his Selling General and Administrative expenses

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