[jaybabii06]

Moester Inc.
Income Statement
For the year ended December 31, 2007
Sales $240,000
Cost of goods sold 144,000
Gross Margin 96,000
Operating expenses (includes depreciation expense of $7,200 63,600
Income from operations 32,400
Other revenue and expenses
Gain on sale of equipment from investing $6,000
Interest expense (4,800) 1,200
Income before income taxes 33,600
Income tax expense 9,600
Net Income $24,000



Moester Inc.
Comparative Balance Sheets
12-31-05 12-31-04
Assets
Cash $46,800 $32,400
Accounts Receivable 120,000 90,000
Inventory 138,000 165,600
Prepaid Expenses 0 24,000
Land 30,000 0
Equipment 87,600 48,000
Accumulated Depreciation (21,600) (28,800)
Total Assets $400,800 $331,200

Liabilities & Stockholders Equity
Accounts Payable 13,200 44,400
Accrued Liabilities 0 14,400
Notes Payable 12,000 0
Mortgage Payable 30,000 0
Common Stock 216,000 180,000
Paid In Capital in Excess of Par 68,400 44,400
Retained Earnings 61,200 48,000
Total Liabilities & Stockholders Equity $ 400,800 $ 331,200



Additional Information for Year End Dec. 31, 2005
Equipment that costs $15,600 with accumulated depreciation of $14,400 was sold at a gain of $6,000
Purchased equipment for $55,200
Borrowed funds by issuing notes payable, $36,00
Paid notes payable, $24,000
Issued 3,000 shares of $10 par value common stock for $60,000
Paid cash dividend of $10,800

[jaybabii06]

Now for my answer, would I add the non cash items such as depreciation to the net income? What is confusing me is the accumulated depreciation of 14,400 that was sold as a gain of 6,000