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a. Prepare a cash flow statement for the following information. b. Include a cash reconciliation statement. Balance Sheet Jan 1 Dec 31 ASSETS: Current Assets: Cash 310,000 600,000 Marketable Securities 1,200,000 1,000,000 Accounts Receivable, net 290,000 330,000 Inventory 3,000,000 4,000,000 Prepaid Expenses 200,000 300,000 Total Current Assets 5,000,000 6,230,000 Total Fixed Assets, net 2,500,000 2,000,000 Total Assets 7,500,000 8,230,000 LIABILITIES & EQUITIES Current Liabilities: Accounts Payable 1,500,000 1,000,000 Notes Payable 1,000,000 1,000,000 Accrued Expenses 500,000 800,000 Total Current Liabilities 3,000,000 2,800,000 Total Long-term Liabilities 1,000,000 1,500,000 Total Liabilities 4,000,000 4,300,000 Preferred Stock 500,000 500,000 Common Stock 500,000 500,000 Capital in Excess of Par 1,000,000 1,000,000 Retained Earnings 1,500,000 1,930,000 Total Stockholders Equity 3,500,000 3,930,000 Total Liabilities and Equity 7,500,000 8,230,000 Income Statement (for ques 1) Sales 10,000,000 COGS 6,000,000 Gross Profit 4,000,000 Administrative expenses 1,200,000 Depreciation 500,000 EBIT 2,300,000 Interest Expense 500,000 EBT 1,800,000 Taxes (40%) 720,000 Net Income 1,080,000 Question 2 Table 5-1 Income Statement Balance Sheet Sales $20,000,000 Assets: Cost of Goods Sold 8,000,000 Cash $ 5,000,000 12,000,000 Marketable Securities 12,500,000 Selling and Administrative 1,600,000 Accounts Receivable, net 2,500,000 Depreciation 3,000,000 Inventory 30,000,000 7,400,000 Prepaid Expenses 5,000,000 Interest 2.000,000 Plant & Equipment 30,000,000 5,400,000 Taxes (40%) 2,160,000 Total Assets 85,000,000 3,240,000 Common Stock Div. 600,000 Liabilities and Equity: $2,640,000 Accounts Payable $20,000,000 Notes Payable 5,000,000 Accrued Expenses 5,000,000 Bonds 25,000,000 Common Stock 5,000,000 Capital in Excess of Par 10,000,000 Retained Earnings 15,000,000 Total Liabilities and Equity $85,000,000 Shares outstanding of common stock = 1,000,000 Market price of common stock = $18. Use Table 5-1 for the following 15 questions. 2-1. The Current Ratio is: 2-2. The Net Profit margin is: 2-3. The Quick Ratio is: 2-4. The Times Interest Earned ratio is: 2-5. The Earnings Per Share is: 2-6. The Gross Profit Margin is: 2-7. The Total Debt to Total Asset ratio is: 2-8. Return on Assets ratio is: 2-9. The Total Asset Turnover ratio is: 2-10. The Operating Profit Margin is: 2-11. The Average Collection Period (365 day year) is: 2-12. The Market to Book ratio is: 2-13. The Debt to Equity ratio is: 2-14. The Inventory Turnover ratio is: 2-15. The Return on Equity is: Question 3 Oleans, Inc. projects sales to be $100,000; $90,000; $95,000 during the months of August, September, and October respectively. Salaries are projected to be $12,000 plus 5% of sales. Purchases are 50% of sales for the month and paid in the month of purchase. A tax payment of $60,000 and an equipment purchase of $20,000 will be made in September. Transactions are for cash, and a ($20,000) cash balance starts the month of August. The firm maintains a minimum target end of month balance of $6,000. There is no limit as to how high the cash balance can be. Calculate the ending cash balance after any deficit is financed to achieve the target level for each of the three months. Question 4 Following is the balance sheet for the end of the year 2013 for Silver Spurs, Inc.: 2013 2014 Current Assets $15,000 Net Fixed Assets 20,000 Total Assets $35,000 Accounts Payable $ 2,000 Notes Payable 1,000 Long-Term Debt 10,000 Common Equity 22,000 Total Liabilities/Equity $35,000 They have generated sales for 2013 of $35,000 resulting in net income of $15,000. Due to the difficulty associated with acquiring raw materials, Silver Spurs has experienced sluggish business that has caused fixed assets to be underutilized.Management thinks it can double sales in 2014 through the introduction of a new product. No new fixed assets will be required and the dividend payout ratio will be 100%. Assume no additional deprecation expense will be taken in 2014. Project next year’s balance sheet in the space provided above to determine the additional funding needed (AFN) for this new product. Assume notes payable at the end of 2013 are paid off in 2014.

a.Prepare a cash flow statement for the following information.

b.Include a cash reconciliation statement.

Balance Sheet

Jan 1Dec 31

ASSETS:

Current Assets:

Cash310,000600,000

Marketable Securities1,200,0001,000,000

Accounts Receivable, net290,000330,000

Inventory3,000,0004,000,000

Prepaid Expenses200,000300,000

Total Current Assets5,000,0006,230,000

Total Fixed Assets, net2,500,0002,000,000

Total Assets 7,500,0008,230,000

LIABILITIES & EQUITIES

Current Liabilities:

Accounts Payable1,500,0001,000,000

Notes Payable1,000,0001,000,000

Accrued Expenses500,000800,000

Total Current Liabilities3,000,0002,800,000

Total Long-term Liabilities1,000,0001,500,000

Total Liabilities4,000,0004,300,000

Preferred Stock500,000500,000

Common Stock500,000500,000

Capital in Excess of Par1,000,0001,000,000

Retained Earnings1,500,0001,930,000

Total Stockholders Equity3,500,0003,930,000

Total Liabilities and Equity7,500,0008,230,000

Income Statement (for ques 1)

Sales10,000,000

COGS6,000,000

Gross Profit4,000,000

Administrative expenses1,200,000

Depreciation500,000

EBIT2,300,000

Interest Expense500,000

EBT1,800,000

Taxes (40%)720,000

Net Income1,080,000

 

 

Question 2Table 5-1

 

Income StatementBalance Sheet

Sales$20,000,000Assets:

Cost of Goods Sold8,000,000Cash$5,000,000

12,000,000Marketable Securities12,500,000

Selling and Administrative1,600,000Accounts Receivable, net2,500,000

Depreciation3,000,000Inventory30,000,000

7,400,000Prepaid Expenses5,000,000

Interest2.000,000Plant & Equipment30,000,000

5,400,000

Taxes (40%)2,160,000Total Assets85,000,000

3,240,000

Common Stock Div.600,000Liabilities and Equity:

$2,640,000Accounts Payable $20,000,000

Notes Payable5,000,000

Accrued Expenses5,000,000

Bonds 25,000,000

Common Stock5,000,000

Capital in Excess of Par10,000,000

Retained Earnings15,000,000

Total Liabilities and

Equity$85,000,000

Shares outstanding of common stock = 1,000,000

Market price of common stock = $18.

Use Table 5-1 for the following 15 questions.

2-1.The Current Ratio is:

2-2.The Net Profit margin is:

2-3.The Quick Ratio is:

2-4.The Times Interest Earned ratio is:

2-5.The Earnings Per Share is:

2-6.The Gross Profit Margin is:

2-7.The Total Debt to Total Asset ratio is:

2-8.Return on Assets ratio is:

2-9.The Total Asset Turnover ratio is:

2-10.The Operating Profit Margin is:

2-11.The Average Collection Period (365 day year) is:

2-12.The Market to Book ratio is:

2-13.The Debt to Equity ratio is:

2-14.The Inventory Turnover ratio is:

2-15.The Return on Equity is:

 

 

 

 

 

 

Question 3

Oleans, Inc. projects sales to be $100,000; $90,000; $95,000 during the months of

August, September, and October respectively.Salaries are projected to be $12,000 plus

5% of sales.Purchases are 50% of sales for the month and paid in the month of purchase.

A tax payment of $60,000 and an equipment purchase of $20,000 will be made in

September.Transactions are for cash, and a ($20,000) cash balance starts the month

of August.The firm maintains a minimum target end of month balance of $6,000.There

is no limit as to how high the cash balance can be.

Calculate the ending cash balance after any deficit is financed to achieve the target level

for each of the three months.

 

Question 4

Following is the balance sheet for the end of the year 2013 for Silver Spurs, Inc.:

20132014

Current Assets$15,000

Net Fixed Assets20,000

Total Assets$35,000

Accounts Payable$ 2,000

Notes Payable1,000

Long-Term Debt10,000

Common Equity22,000

Total Liabilities/Equity$35,000

They have generated sales for 2013 of $35,000 resulting in net income of $15,000.Due to the difficulty associated with acquiring raw materials, Silver Spurs has experienced sluggish business that has caused fixed assets to be underutilized.Management thinks it can double sales in 2014 through the introduction of a new product.No new fixed assets will be required and the dividend payout ratio will be 100%.Assume no additional deprecation expense will be taken in 2014.Project next year’s balance sheet in the space provided above to determine the additional funding needed (AFN) for this new product.Assume notes payable at the end of 2013 are paid off in 2014.

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