Exercise 13-14
Selected information from Sandhill Ltd.'s statement of financial position and income statement is as follows:
SANDHILL LTD.
Statement of Financial Position (partial)
December 31
2018 2017
Current assets
Accounts receivable
$7,600 $12,600
Inventory
5,000 4,900
Prepaid expenses
4,400 2,400
Current liabilities
Accounts payable
3,950 2,600
Income tax payable
1,400 600
Accrued liabilities
2,800 1,050
Bank loan payable—current portion
5,600 8,400
SANDHILL LTD.
Income Statement
Year Ended December 31, 2018
Net sales
$185,000
Cost of goods sold
119,000
Gross profit
66,000
Operating expenses
57,000
Income from operations
9,000
Interest expense
1,900
Income before income tax
7,100
Income tax expense
3,900
Net income
$3,200
Additional information:
1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. Accounts payable relate to purchases of merchandise.
3. Operating expenses included depreciation expense of $11,500 and a loss of $5,300 on the disposal of equipment.
