Ch 02: Assignment - Financial Statements, Cash Flow, and TaxesBack to AssignmentAttempts3. Income statementThe 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:Keep the Highest / 2Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales toincrease 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 70% 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 $1,025,100 of preferred 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.Net salesLess: Operating costs, except depreciation and amortizationLess: Depreciation and amortization expensesOperating income (or EBIT)Less: Interest expensePre-tax income (or EBT)Less: Taxes (40%)Earnings after taxesLess: Preferred stock dividendsCute Camel Woodcraft Company Income StatementFor Year Ending December 31Year 1$15,000,00010,500,000600,000$3,900,000390,0003,510,0001,404,000$2,106,000100,0002,006,000842,400$1,163,600Earnings available to common shareholdersLess: Common stock dividendsContribution to retained earnings• It isYear 2 (Forecasted)$Given the results of the previous income statement calculations, complete the following statements:$• In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect toreceivein annual dividends.cash.• If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to changefromin Year 1 toin Year 2.• Cute Camel's before interest, taxes, depreciation and amortization (EBITDA) value changed fromto▼in Year 2.to 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. This is becauseof the item reported in the income statement involve payments and receipts of▼in Year 1AnswersAa8-January 11, 2024 at 5:47 PM#AnswersPlease solve using these possible answers for the blanks:Blank 1: $20 or $30 or $40 or $50Blank 2: $5.02 or $8.78 or $9.75 or $5.27Blank 3: $6.16 or $12.56 or $6.41 or $10.68Blank 4: $4,500,000 or $6,006,000 or $14,400,000 or $5,304,000Blank 5: $19.503,750 or $5,625,000 or $7,587,750 or $15,687,750Blank 6: correct or incorrectBlank 7: all or all but one

Budget Income Statement: Budget Income Statement is a document that helps to estimate and evaluate a…

3. Income statement 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 70% 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). 4. In Year 2, Cute Camel expects to pay $100,000 and $1,025,100 of preferred 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 nearest whole dollar. Year 1 $15,000,000 Net sales Less: Operating costs, except depreciation and amortization 10,500,000 Less: Depreciation and amortization expenses 600,000 Operating income (or EBIT) Less: Interest expense Pre-tax income (or EBT) Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings Cute Camel Woodcraft Company Income Statement For Year Ending December 31 . It is Year 2 (Forecasted) $ $3,900,000 390,000 3,510,000 1,404,000 $2,106,000 $ 100,000 2,006,000 842,400 $1,163,600 $ Given the results of the previous income statement calculations, complete the following statements: cash. $ • In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. • If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. • Cute Camel's before interest, taxes, depreciation and amortization (EBITDA) value changed from to in Year 2. in Year 1 to 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 annual contribution to retained earnings. This is because of the item reported in the income statement involve payments and receipts of Answers Aa=& January 11, 2024 at 5:47 PM Answers Please solve using these possible answers for the blanks: Blank 1: $20 or $30 or $40 or $50 Blank 2: $5.02 or $8.78 or $9.75 or $5.27 Blank 3: $6.16 or $12.56 or $6.41 or $10.68 Blank 4: $4,500,000 or $6,006,000 or $14,400,000 or $5,304,000 Blank 5: $19.503,750 or $5,625,000 or $7,587,750 or $15,687,750 Blank 6: correct or incorrect Blank 7: all or all but one