Chapter 11
Financial Statement Analysis
591
AP-21B (
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)
The income statements and balance sheets for Hathaway Inc. are shown below for the last
three fiscal years. All sales are on credit.
Hathaway Inc.
Income Statement
For the Year Ended
2016
2015
2014
Sales
$800,000
$720,000
$760,000
Cost of Goods Sold
260,000
288,000
266,000
Gross Profit
540,000
432,000
494,000
Expenses
Operating Expense
320,000
216,000
342,000
Depreciation Expense
64,000
72,000
76,000
Advertising Expense
80,000
72,000
114,000
Interest Expense
10,000
10,000
10,000
Total Expenses
474,000
370,000
542,000
Net Income (Loss) before Taxes
66,000
62,000
(48,000)
Income Tax Expense (Return)
29,700
27,900
(21,600)
Net Income (Loss)
$36,300
$34,100
($26,400)
Hathaway Inc.
Balance Sheet
At the Year Ended
2016
2015
2014
Cash
$234,400
$149,600
$80,000
Accounts Receivable
84,000
70,000
56,000
Inventory
136,000
102,000
61,200
Equipment
110,000
174,000
246,000
Total Assets
$564,400 $495,600 $443,200
Accounts Payable
$54,600
$45,500
$36,400
Unearned Revenue
21,000
23,100
18,900
Long-Term Debt
50,000
50,000
50,000
Common Shares
85,500
60,000
55,000
Retained Earnings
353,300
317,000
282,900
Total Liabilities and Shareholders' Equity
$564,400 $495,600 $443,200
Other Information
Hathaway Inc. has an unlimited number of shares authorized; the following common shares
were outstanding in each year for the entire year: 2016—60,000, 2015—40,000,
2014—30,000.
