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7. Presented below is information related to the operations of Teachable NEMA Inc. Income statement For...

7. Presented below is information related to the operations of Teachable NEMA Inc.

Income statement For the year ended December 31, 2015 Sales 408,000 Cost of goods sold 190,000 Gross Profit 218,000 Depreciation expense 14,000 Other operating expenses 141,000 Income from operations 63,000 Loss on sale of equipment 2,000 Income before income taxes 61,000 Income tax expense 19,000 Net income $42,000 December 31- - - 2015 2014 Cash $ 58,000 $ 40,000 Accounts receivable 55,000 48,000 Inventory 35,000 22,000 Prepaid expenses 15,000 20,000 Land 36,000 20,000 Building 100,000 100,000 Accumulated depreciation: Building (17,000) (8,000) Equipment 58,000 80,000 Accumulated depreciation: Equipment (15,000) (20,000) Total $325,000 $302,000 Accounts payable $ 35,000 $ 39,000 Bonds payable 0 100,000 Common stock 200,000 100,000 Retained earnings 90,000 63,000 Total $325,000 $302,000 Additional information: (a) In 2015, Teachable NEMA declared and paid a cash dividend. (b) The company converted $100,000 of bonds into common stock (c) Equipment with a cost of $22,000 and a book value of $12,000 was sold for $10,000. Land was acquired for cash.

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