Aggressive& Construct income statement for each company for strong, av

QUESTION

Aggressive&
Construct income statement for each company for strong, average, and weak economies using the following format: Question Details Aggressive Moderate Conservative Current Assets $225,000 $300,000 $450,000 Fixed Assets 300,000 $300,000 300,000 Total Assets $525,000 $600,000 $750,000 Current liabilities (cost=12%) $300,000 $150,000 $750,000 Long-term debt (cost=10%) 0 150,000 300,000 Total Debt $300,000 $300,000 $375,000 Equity 225,000 300,000 375,000 Total Liabilities and equity 525,000 $600,000 $750,000 Current Ratio 0.75 2.0 6.0 The cost of goods sold functions for the three firms are as follows: Cost of Goods Sold = Fixed Costs + Variable Costs Aggressive: Cost of goods sold = $300,000 + 0.70 (Sales) Moderate: Cost of goods sold = $405,000 + 0.65 (Sales) Conservative: Cost of goods sold = $577,500 + 0.60 (Sales)

use of working capital differences, sales for the three firms under different economic conditions are expected to vary as follows: Aggressive Moderate Conservative Strong economy $1,800,000 $1,875,000 $1,950,000 Average economy 1,350,000 1,500,000 1,725,000 Weak economy 1,050,000 1,200,000 1,575,000 Question: A.Construct income statement for each company for strong, average, and weak economies using the following format: Sales Less: Cost of goods sold Earnings before interest expense Earnings before taxes (EBT) Less: Taxes (at 40%) Net income (NI)

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