line 03 Economic and financial data for the year 20XX are presented below. line 04 The revenue generated from sales of product X was $1,500,000. Cost of goods sold amounted to $900,000. Gross profit is therefore calculated as follows: Revenue - Cost of Goods Sold = Gross Profit $1,500,000 - $900,000 = $600,000 line 07 Operating expenses for the year totaled $400,000. This includes salaries, rent, utilities, and marketing costs. Net income before taxes is computed by subtracting operating expenses from gross profit: Gross Profit - Operating Expenses = Net Income Before Taxes $600,000 - $400,000 = $200,000 line 10 Income tax expense was assessed at a rate of 30% on taxable income. Tax Expense = Taxable Income * Tax Rate $200,000 * 30% = $60,000 Net Income After Taxes is then determined: Net Income Before Taxes - Income Tax Expense = Net Income After Taxes $200,000 - $60,000 = $140,000 line 13 The company's balance sheet as of December 31, 20XX shows the following assets: Cash: $50,000 Accounts Receivable: $75,000 Inventory: $100,000 Property, Plant, and Equipment (net): $300,000 Total Assets = Cash + Accounts Receivable + Inventory + Property, Plant, and Equipment $50,000 + $75,000 + $100,000 + $300,000 = $525,000 line 16 Liabilities include: Accounts Payable: $80,000 Short-term Debt: $40,000 Long-term Debt: $150,000 Total Liabilities = Accounts Payable + Short-term Debt + Long-term Debt $80,000 + $40,000 + $150,000 = $270,000 line 19 Equity consists of Common Stock and Retained Earnings. Common Stock: $100,000 Retained Earnings (beginning balance): $155,000 Addition to Retained Earnings during the year: $140,000 Ending Retained Earnings = Beginning Retained Earnings + Addition to Retained Earnings $155,000 + $140,000 = $295,000 Total Equity = Common Stock + Ending Retained Earnings $100,000 + $295,000 = $395,000 line 22 The accounting equation must hold true: Assets = Liabilities + Equity $525,000 = $270,000 + $395,000 $525,000 ≠ $665,000 There appears to be an error in the calculations or data provided.