Use the information below to create (If possible) 3-years of an income statement

Question

Use the information below to create (If possible) 3-years of an income statement and a cash flow statement. Not all items listed below will appear on these two statements, though they may be necessary to create the statements.  

Sales: $1,000,000 in Y1, increasing at 15%/year

Depreciation Expense: $60,000/year (straight-line)

Retained Earnings: $200,000 Y0.

A/P: $70,000 Y1; $50,000 Y2, and $30,000 Y3

CapEx: $70,000/year

COGS: 40% of sales each year

Patents: $50,000

SG&A: 25%of sales Y1, 20% of sales Y2, and 15% of sales Y3

Common Stock: $400,000

Inventory: $50,000 Y1, $100,000 Y2, $300,000 Y3

R&D: $30,000/year

A/R: $10,000 Y1; $25,000 Y2; $50,000 Y3

Notes Payable: $150,000 Y1. No additional financing added in Y2 or Y3

PPE $400,000 Y1, $470,000 Y2, $540,000 Y3

Tax rate 35%

Explanation / Answer

Draft Balance Sheet

Income Statement Particulars Year1 Year2 Year3 Sales 1000000 1150000 1322500 Less Cost of Goods Sold 400000 460000 529000 Depreciation Expense 60000 60000 60000 Capital Expenditure 70000 70000 70000 SG&A 250000 230000 198375 R&D 30000 30000 30000 Total Expenses 810000 850000 887375 Net Income before taxes 190000 300000 435125 Less Taxes @35% 66500 105000 152294 Income After Taxes 123500 195000 282831

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