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: Cold Goose Metal Works Inc.'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. Cold Goose is able achieve this level of increased sales, but its interast costs increase from 10% to 15% of earnings before interest and taxes (ERIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 60% 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, Cold Goose expects to pay $100, 000 and $1,642, 200 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Coid Goose, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar, Cold Goose Metal Works Inc. Income Statement For Year Ending December 31 Year 1 Year 2 (Forecasted) Net sales $20,000,000 5 Less: Operating costs, except depreciation and amortization 12,000,000 Less: Depreciation and amortization expenses 800,000 Operating income (or EBIT) 57, 200, 000 $ Less: Interest expense 720, 000 Pre-tax income (or EAT) 6, 480,000 Last Taxes (40%) 2,592,000 Earnings after taxes $3, 888, 000 S Less: Proferred stack dividends 100, 000 Earnings available to common shareholders 3,788, 000 Less. Common stock dividends 1,360, 800 Contribution to retained earnings $2, 427, 200 $ Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cold Goose has 10,000 shares of preferred stock ssued and cutstanding, then each preferred share should expect to receive in annual dividends. If Cold Goose has 500, 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 Cold Goose's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. It is to say that Cold Goose'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 cash.