Sedona Merchandising Company

Income Statement
For The Year Ended 12/31/99

Revenue From Sales

Sales $895,000
Less: Sales Returns & Allowances $11,900
Sales Discounts 7,100 19,000
Net Sales 876,000
Cost Of Merchandise Sold 486,200
Gross Profit 389,800

Operating Expenses
Selling Expenses:
Sales Salaries Expense $80,150
Advertising Expense 25,000
Depreciation Expense-Store Equip. 7,500
Store Supplies Expense 2,950
Misc. Selling Expense 1,335
Total Selling Expenses $116,935

Administrative Expenses:
Office Salaries Expense $45,150
Rent Expense 26,000
Insurance Expense 6,260
Depreciation Expense-Office Equip. 3,800
Office Supplies Expense 1,350
Misc. Administrative Expense 1,650
Total Administrative Expenses 84,210
Total Operating Expenses 201,145
Income From Operations 188,655

Other Income & Expense

Interest Expense $12,600
Rent Income 800
Net Other Expense 11,800
Net Income $176,855

Sedona Merchandising Company

Statement of Owner's Equity
For The Year Ended 12/31/99

Agee Capital - 1/1/99 $175,510

Add: Net Income $176,855
Less: Withdrawals 40,000
Net Increase in Equity 136,855
Agee Capital - 12/31/99 $312,365

Sedona Merchandising Company

Balance Sheet
December 31, 1999

Assets
Current Assets
Cash $38,175
Accounts Receivable 112,500
Merchandise Inventory 220,000
Prepaid Insurance 3,440
Store Supplies 1,300
Office Supplies 750
Total Current Assets $376,165

Property Plant & Equipment

Store Equipment $132,000
Less:Accum. Deprec. - Store Equip. 47,800 84,200
Office Equipment 50,000
Accum. Deprec. - Office Equip. 21,000 29,000
Total Net Plant Assets 113,200
Total Assets $489,365

Liabilities & Equity

Current Liabilities
Accounts Payable $66,700
Salaries Payable 4,900
Unearned Rent Income 400
$72,000
Long-Term Liabilities
Note Payable (Final Pay't. 6/08) 105,000
Total Liabilities $177,000

Owner's Equity
Agee - Capital 12/31/99 312,365
$489,365