INCOME STATEMENTS ($000's)

Years ended June 30

Sales revenue
Cost of goods sold
Gross profit
Selling and general expenses
Depreciation expense
Warranty expense
Bad debt expense
Legal fees
Interest expense
Income before taxes
Income tax expense
Net income
Dividends paid

2015
7,750 $
5,545
2,205
1,671
56
75
90
43
110
160
47
113 $

2014
7,713 $
5,381
2,332
1,622
55
65
85
14
127
364
109
255 $

2013
7,493
5,225
2,268
1,577
49
55
90
12
135
350
104
246

125 $

125 $

100

The following schedule shows the sales revenue and components of costs of goods sold for each
of Divergent's two products.
SCHEDULES OF GROSS PROFIT ($000's)
Years ended June 30
mp3 Players
Sales
Cost of goods sold:
Materials
Labor
Overhead
Standard cost variances
Depreciation
Gross Profit
Travel alarm clocks
Sales
Cost of goods sold:
Materials
Labor
Overhead
Standard cost variances
Depreciation
Gross Profit

2015

2014

2013

4,880 $

4,932 $

4,791

1,895
1,103
689
3
70
3,760
1,120 $

1,835
1,074
664
5
70
3,648
1,284 $

1,781
1,043
662
(4)
68
3,550
1,241

2,870 $

2,781 $

2,702

888
537
301
(2)
61
1,785
1,085 $

868
532
276
(3)
60
1,733
1,048 $

840
505
270
2
58
1,675
1,027

BALANCE SHEETS ($000's)

June 30
Cash
Accounts receivable
Bad debt allowance
Inventories:
Raw materials (at cost)
Finished goods: (at standard)
mp3 players
Travel alarms
Prepaid expenses
Current assets
Land
Building and equipment
Accumulated depreciation
Total assets
Accounts payable
Taxes payable
Accrued interest
Warranty liability
Current portion of long-term debt
Current liabilities
Long-term debt
Total liabilities
Paid-in-capital
Retained earnings
Total stockholders'equity
Total liabilities and equity

2015
$

$
$

2014

2013

30 $
795
(70)

165 $
674
(60)

77
658
(60)

322

304

286

863
405
8
2,353
450
1,865
(945)
3,723 $

738
390
2
2,213
450
1,858
(790)
3,731 $

710
374
4
2,049
450
1,831
(610)
3,720

787 $
16
40
100
943
1,300
2,243
550
930
1,480
3,723 $

675 $
14
10
40
100
839
1,400
2,239
550
942
1,492
3,731 $

694
13
11
40
100
858
1,500
2,358
550
812
1,362
3,720