Please just complete income statement, and the following blanks. The income statement, also known as the profit and loss (P&L) statement, provides a snapshot of the financial performance of a company during aspecified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred andcommon shareholders.The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to theperiod in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the incomestatement and other financial statements and reports to evaluate the company's financial performance and condition.Consider the following scenario:Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25%next year.1. Cute Camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings beforeinterest and taxes (EBIT).2. The company's operating costs (excluding depreciation and amortization) remain at 65% of net sales, and its depreciation andamortization expenses remain constant from year to year.3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT).4. In Year 2, Cute Camel expects to pay $100,000 and $1,419,075preferred and common stock dividends, respectively.Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearestwhole dollar. Cute Camel Woodcraft CompanyIncome Statement for Year Ending December 31Year 1Year 2 (Forecasted)Net sales$20,000,000Less: Operating costs, except depreciation and amortization13,000,000Less: Depreciation and amortization expenses800,000800,000Operating income (or EBIT)$6,200,000Less: Interest expense620,000Pre-tax income (or EBT)5,580,000Less: Taxes (40%)2,232,000Earnings after taxes$3,348,000$Less: Preferred stock dividends100,000Earnings available to common shareholders3,248,000Less: Common stock dividends1,171,800Contribution to retained earnings$2,076,200$2,535,425Given the results of the previous income statement calculations, complete the following statements:• In Year 2, if Cute Camel has 10,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receivein annual dividends.• If Cute Camel has 500,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change fromin Year 1 toin Year 2.• Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed fromin Year 1in Year 2.• It isto say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annualcontribution to retained earnings, $2,076,200 and $2,535,425, respectively. This is becauseof the items reported in the incomestatement involve payments and receipts of cash.

Income statement it is periodic statement which accounts all income and expenses for the specific…

The income statement, also known as the profit and loss (P&L) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Cute Camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 65% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT).

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 1MCQ: Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a...