Chapter 14 Financial Statement Analysis 677
Quest Polymers, Inc.
Comparative Income Statement
For the Years Ended December 31, 2007 and 20062007 2006
Net sales $2,800,000 $2,425,000
Cost of goods sold 1,250,000 1,150,000
Gross profit $1,550,000 $1,275,000
Selling expenses $ 605,000 $ 575,000
Administrative expenses 405,000 380,000
Total operating expenses $1,010,000 $ 955,000
Income from operations $ 540,000 $ 320,000
Other income 40,000 30,000
$ 580,000 $ 350,000
Other expense (interest) 79,000 34,000
Income before income tax $ 501,000 $ 316,000
Income tax expense 140,000 95,000
Net income $ 361,000 $ 221,000Quest Polymers, Inc.
Comparative Balance Sheet
December 31, 2007 and 2006Dec. 31, 2007 Dec. 31, 2006
Assets
Current assets:
Cash $ 108,000 $ 96,000
Marketable securities 320,000 126,000
Accounts receivable (net) 172,000 158,000
Inventories 325,000 265,000
Prepaid expenses 20,000 25,000
Total current assets $ 945,000 $ 670,000
Long-term investments 250,000 200,000
Property, plant, and equipment (net) 2,100,000 1,500,000
Total assets $3,295,000 $2,370,000
Liabilities
Current liabilities $ 285,000 $ 225,000
Long-term liabilities:
Mortgage note payable, 9%, due 2012 $ 500,000 $ —
Bonds payable, 8.5%, due 2016 400,000 400,000
Total long-term liabilities $ 900,000 $ 400,000
Total liabilities $1,185,000 $ 625,000
Stockholders’ Equity
Preferred $8 stock, $100 par $ 400,000 $ 300,000
Common stock, $10 par 800,000 800,000
Retained earnings 910,000 645,000
Total stockholders’ equity $2,110,000 $1,745,000
Total liabilities and stockholders’ equity $3,295,000 $2,370,000