Cardinal Bear has come to you for advice regarding a potential investment. He is willing to spend $500,000 to purchase a basketball equipment manufacturer and is hoping to generate $50,000 a year from the investment. The owners have been looking to sell the company since 2017. Mr. Bear doesn’t have all of the information, but he does have the financial statements for the last two years. Based on the information, prepare a one-page report to Mr. Bear. 20192018Assets20192018Sales$ 1,000,000 $600,000Cash30,00060,000Cost of Goods Sold722,500 $250,000Accounts Receivable$120,00030,000Gross Profit277,500 $350,000Supplies10,00010,000$$485,000 $ 250,000Inventory325,000150,000ExpensesTotal Current AssetsDE: Equipment25,00050,000200,000 $ 200,000175,000 -$ 150,000-$DE: Warehouse10,00010,000EquipmentInterest ExpenseBad Debt Expense3,7503,750AD: Equipment10,000NBV: Equipment25,000 $50,000Write-down of Inventory30,00050.000$100,000 -$ 90,000150,000 $ 160,000$250,000 $ 250,000Other ExpensesTotal Expenses38,750Warehouse$77,500 $153,750AD: WarehouseNBV: Warehouse$Net Income200,000 $196,250Total Fixed Assets175,000 $ 210,000Total Assets$660,000 $ 460,000LiabilitiesAccounts Payable10,00010,000Long Term Bank LoanTotal Liabilities25,00025.000$35,000 $ 35,000Equity$425,000 $ 228,750200,000 $ 196,250$BeginningNet Income$Ending EquityTotal Liabilities and Equity $625,000 $ 425,000660,000 $ 460,000

While analyzing the financial statement it is noticed that both years company generate the huge net…

Cardinal Bear has come to you for advice regarding a potential investment. He is willing to spend $500,000 to purchase a basketball equipment manufacturer and is hoping to generate $50,000 a year from the investment. The owners have been looking to sell the company since 2017. Mr. Bear doesn’t have all of the information, but he does have the financial statements for the last two years. Based on the information, prepare a one-page report to Mr. Bear.

Cardinal Bear has come to you for advice regarding a potential investment. He is willing to spend $500,000 to purchase a basketball equipment manufacturer and is hoping to generate $50,000 a year from the investment. The owners have been looking to sell the company since 2017. Mr. Bear doesn’t have all of the information, but he does have the financial statements for the last two years. Based on the information, prepare a one-page report to Mr. Bear.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 40P

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Use the below information to answer the following questions: 20202021Sales$11,573$12,936Depreciation 1661 1736Cost of goods sold 3979 4707Other Expenses 846 924Interest Expense 776 926Cash 6067 6466Accounts Receivables 8034 9427Short-term Notes Payable 1171 1147Long-term debt 20,320 24,696Net fixed assets 50,888 54,273Accounts Payable 4384 4644Tax rate 26% 34%Inventory 14,283 15,288Payout ratio 33% 30% A. Create the Income Statements for 2020 and 2021 (including dividends paid and retained earnings).
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