Reference no: EM132926587
Question - The following information is taken from the 2017 annual report of Ivanhoe, Inc. Ivanhoe's fiscal year ends December 31 of each year. Ivanhoe's December 31, 2017, balance sheet is as follows.
Ivanhoe, Inc. Balance Sheet December 31, 2017
Assets
Cash $450
Inventory 1,900
Total current assets 2,350
Plant and equipment 2,100
Accumulated depreciation (168)
Total assets 4,282
Liabilities
Bonds payable (net of discount) $1,426
Stockholders' equity
Common stock 1,500
Retained earnings 1,356
Total liabilities and stockholders' equity $4,282
Note X: Long Term Debt:
On January 1, 2016, Ivanhoe issued bonds with face value of $1,500 and a coupon rate equal to 10%. The bonds were issued to yield 12% and mature on January 1, 2021.
Additional information concerning 2018 is as follows.
1. Sales were $3,700, all for cash.
2. Purchases were $2,000, all paid in cash.
3. Salaries were $720, all paid in cash.
4. Property, plant, and equipment was originally purchased for $2,100 and is depreciated straight-line over a 25-year life with no salvage value.
5. Ending inventory was $2,100.
6. Cash dividends of $100 were declared and paid by Ivanhoe.
7. Ignore taxes.
8. The market rate of interest on bonds of similar risk was 12% during all of 2018.
9. Interest on the bonds is paid semiannually each June 30 and December 31.
Required - Prepare an income statement for the year ending December 31, 2018. Assume semiannual compounding of the bond interest.