Freiman Corporation's most recent balance sheet and income statement appear below:
| Balance Sheet |
| December 31, Year 2 and Year 1 |
| (in thousands of dollars) |
| Year 2 | Year 1 |
|---|
| Assets | | |
|---|
| Current assets: | | |
|---|
| Cash | $ 176 | $ 136 |
|---|
| Accounts receivable, net | 260 | 280 |
|---|
| Inventory | 136 | 146 |
|---|
| Prepaid expenses | 48 | 48 |
|---|
| Total current assets | 620 | 610 |
|---|
| Plant and equipment, net | 780 | 780 |
|---|
| Total assets | $ 1,400 | $ 1,390 |
|---|
| Liabilities and Stockholders' Equity | | |
|---|
| Current liabilities: | | |
|---|
| Accounts payable | $ 146 | $ 166 |
|---|
| Accrued liabilities | 98 | 98 |
|---|
| Notes payable, short term | 68 | 78 |
|---|
| Total current liabilities | 312 | 342 |
|---|
| Bonds payable | 304 | 314 |
|---|
| Total liabilities | 616 | 656 |
|---|
| Stockholders' equity: | | |
|---|
| Common stock, $2 par value | 116 | 116 |
|---|
| Additional paid-in capital | 240 | 240 |
|---|
| Retained earnings | 428 | 378 |
|---|
| Total stockholders' equity | 784 | 734 |
|---|
| Total liabilities & stockholders' equity | $ 1,400 | $ 1,390 |
|---|
| Income Statement |
| For the Year Ended December 31, Year 2 |
| (in thousands of dollars) |
| Sales (all on account) | $ 1,630 |
|---|
| Cost of goods sold | 940 |
|---|
| Gross margin | 690 |
|---|
| Selling and administrative expenses | 399 |
|---|
| Net operating income | 291 |
|---|
| Interest expense | 51 |
|---|
| Net income before taxes | 240 |
|---|
| Income taxes (30%) | 72 |
|---|
| Net income | $ 168 |
|---|
The working capital at the end of Year 2 is:
▸ $308 thousand
▸ $776 thousand
▸ $780 thousand
▸ $620 thousand
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