Income Statement for 2003

Revenue

Sales $2,000,000

Cost of Goods Sold

Cost of Goods Sold (55% of Sales) $1,100,000

Gross Profit

Gross Profit $900,000

Operating Expenses

Depreciation Expense (10% of $1,500,000 Gross Plant and Equipment) $150,000 Interest Expense (9% on $120,000 Notes Payable) $10,800 Interest Expense (11% on $300,000 Bonds Payable) $33,000 Selling and Administrative Expenses $200,000

Total Operating Expenses $393,800

Income from Operations

Income from Operations $506,200

Income Tax Expense

Income Tax Expense (40% of $506,200) $202,480

Net Income

Net Income $303,720

Earnings per Share (Not possible to calculate without knowing number of shares outstanding)

Notes:

• Cost of Goods Sold is calculated as a percentage of Sales.
• Depreciation Expense is estimated based on 10% of the total gross plant and equipment (without considering accumulated depreciation).
• Interest Expense is calculated for both Notes Payable and Bonds Payable based on their respective interest rates and outstanding balances.