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    Income Statement and Balance Sheet for Pepper Industries

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    Build an income statement & balance sheet from given data and ratios. I have the income statement correct, but I'm tied up on the balance sheet and I think it's because of the stock part. See attached file for full problem description.

    Balance Sheet
    March 31

    Current assets:
    Cash $80,000
    Accounts receivable, net 520,000
    Inventory 280,000
    Total current assets 880,000
    Plant and equipment, net 320,000
    Total assets $1,200,000

    Current liabilities $320,000
    Bonds payable, 10% 8,000
    Total liabilities 328,000
    Stockholders' equity:
    Common stock, $5 par value 700,000
    Retained earnings 413,000
    Total stockholders' equity 287,000
    Total liabilities and equity $615,000

    Income Statement
    For the Year Ended March 31

    Sales $4,200,000
    Less cost of goods sold 2,080,000
    Gross margin 2,120,000
    Less operating expenses 1,580,000
    Net operating income 540,000
    Less interest expense 80,000
    Net income before taxes 460,000
    Less income taxes (30%) 138,000
    Net income $322,000

    Balances at beginning of current year:
    Accounts receivable $270,000
    Inventory $360,000
    Total assets $1,800,000

    Typical ratios:
    Earnings per share $2.30
    Debt-to-equity ratio 0.875
    Accounts receivable turnover 14.0
    Current ratio 2.75
    Return on total assets 18.0%
    Times interest earned 6.75
    Acid-test (quick) ratio 1.25
    Inventory turnover 6.5
    Accounts receivable $160,000
    Inventory 280,000
    Total assets 1,200,000

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    Solution Summary

    The solution explains the preparation of income statement and balance sheet for Pepper Industries given some missing data and ratios.