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Background / Description
The financial statements of Morse Limited appear below.
Table 3: MORSE LIMITED Comparative Statements of Financial Position (Dec. 31)Assets20162015Cash$59,000$23,000Accounts receivable31,00034,000Merchandise inventory20,00015,000Property, plan, and equipment50,00078,000Accumulated depreciation(20,000)(24,000)Total$140,000$126,000Table 4: MORSE LIMITED Comparative Statements of Financial Position (Dec. 31) ContinuedLiabilities and Shareholders’ Equity20162015Accounts payable$15,000$23,000Income tax payable13,0008,000Mortgage payable 9,00033,000Common shares39,00024,000Retained earnings64,00038,000Total $140,000$126,000Table 5: MORSE LIMITED Income Statement Year Ended December 31 2016
Sales ……………………………………………………………………………
$380,000
Cost of goods sold …………………………………………………………….
(290,000)
Gross profit …………………………………………………………………….
90,000
Operating expenses …………………………………………………………..
(36,000)
Interest expense ………………………………………………………………
(4,000)
Profit before income tax ………………………………………………………
50,000
Income tax expense …………………………………………………………..
(10,000)
Profit ……………………………………………………………………………
$40,000
Additional information regarding fiscal 2016:
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