The following information was drawn from the annual report of Active Wilderness Adventures (AWA).
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Required:
a. Compute the percentage of growth in net income from 2013 to 2014. Can stockholders expect a similar increase between 2014 and 2015?
b. Assuming that AWA collected $240,000 cash from earnings (i.e., net income), explain how this money was spent in 2014.
c. Assuming that AWA experiences the same percentage of growth from 2014 to 2015 as it did from 2013 to 2014, determine the amount of income from continuing operations that the owners can expect to see on the 2015 income statement.
d. During 2015, AWA experienced a $50,000 loss due to storm damage (note that this would be shown as an extraordinary loss on the income statement). Liabilities and common stock were unchanged from 2014 to 2015. Use the information that you computed in Requirement c plus the additional information provided in the previous two sentences to prepare an income statement and balance sheet as of December 31,2015.