Question

In: Finance

1. New Madrid Corporation has sales of $2,000,000 in its first year of business. Over this...

1. New Madrid Corporation has sales of $2,000,000 in its first year of business. Over this year variable costs of goods sold were 20% of sales. Fixed cost of goods sold were $200,000. Selling and administrative cost were $400,000 and taxes were 30% of pretax income. Please calculate New Madrid Corporation’s after-tax income.

2. Please start with the data in the prior problem concerning New Madrid Corporation. In projecting the proforma second years income statement for New Madrid, assume that sales increase by 20% in the second year of operation, variable costs of goods sold stay at 20% of sales, fixed cost of sales increase by 10% over the second year, selling and administrative cost increase by 5% and taxes remain at 30% of pretax profit. Please calculate New Madrid Corporation’s projected after-tax income for the second year of operation.

3. Caruthersville Corporation begins the year with $800,000 in plant property and equipment. This equipment is depreciated by $40,000 over the coming year. Over this same year, Caruthersville purchases additional equipment worth $70,000. What is the ending balance of the plant property and equipment account at the end of the year?

4. Hamon Corporation is projecting its balance sheet and it arrives at the following numbers for the coming years. At the end of year one, total assets equal $8,000,000 while total liabilities and equity equal $9,500,000. At the end of year two, total assets equal $11,000,000 and total liabilities and equity equals 10,000,000. How much money will Hamon need to borrow money or have left over in years one and two?

Solutions

Expert Solution

1)

2 )      sales is increases by 20% , so sales of 2nd year    = 2000,000(1+20%)   = 2,400,000

        Fixed COGS   increases by 10% , so fixed COGS of 2nd year = 200,000(1+10%)   = 220,000

     selling& admin cost increases by 5 % , so selling& admin cost of 2nd year = 400,000(1+5%)   = 420,000

3)

4)

Year 1

Additional funds needed    = Total Liabilities -   Total Assets                  

                               = 9500000 - 8000000     

                         = $ 1,500,000.00           

                   

Year 2                

            Excess funds         = Total Assets - Total Liabilites                       

                        = 11000000   -   10000000  

                                           =   $ 1000,000.00


Related Solutions

   New Madrid Corporation has sales of $2,000,000 in its first year of business. Over this year...
   New Madrid Corporation has sales of $2,000,000 in its first year of business. Over this year variable costs of goods sold were 20% of sales. Fixed cost of goods sold were $200,000. Selling and administrative cost were $400,000 and taxes were 30% of pretax income. Please calculate New Madrid Corporation’s after-tax income.    Please start with the data in the prior problem concerning New Madrid Corporation. In projecting the proforma second years income statement for New Madrid, assume that sales...
Viejol Corporation has collected the following information after its first year of sales. Sales were $2,000,000...
Viejol Corporation has collected the following information after its first year of sales. Sales were $2,000,000 on 100,000 units, selling expenses $210,000 (40% variable and 60% fixed), direct materials $498,000, direct labor $600,200, administrative expenses $280,000 (20% variable and 80% fixed), and manufacturing overhead $374,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10%...
Stephens Company has a deductible temporary difference of $2,000,000 at the end of its first year...
Stephens Company has a deductible temporary difference of $2,000,000 at the end of its first year of operations. Its tax rate is 40 percent. Stephens has $1,800,000 of income taxes payable. After a careful review of all available evidence, Stephens determines that it is probable that it will not realize $200,000 of this deferred tax asset. On Stephens Company’s statement of financial position at the end of its first year of operations, what is the amount of deferred tax asset?...
Madrid Corporation has 15,000 shares of $70 par common stock outstanding. On June 8, Madrid Corporation...
Madrid Corporation has 15,000 shares of $70 par common stock outstanding. On June 8, Madrid Corporation declared a 3% stock dividend to be issued August 12 to stockholders of record on July 13. The market price of the stock was $103 per share on June 8. Journalize the entries required on June 8, July 13, and August 12. For a compound transaction, if an amount box does not require an entry, leave it blank. If no entry is required, select...
Viejol corporation has collected the following information after its first year of sales. Sales were 1,600,00...
Viejol corporation has collected the following information after its first year of sales. Sales were 1,600,00 on 100,00 units, selling expenses 250,000 940, variable and 60% fixed) direct materials 490,00, direct labor 290,000, administrative expenses 270,000 ( 20% variable and 80% fixed), and manufacturing overhead 380,000( 70% variable and 30% fixed). Top management asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10%...
Martinez Corporation has collected the following information after its first year of sales. Sales were $1,250,000...
Martinez Corporation has collected the following information after its first year of sales. Sales were $1,250,000 on 125,000 units, selling expenses $250,000 (40% variable and 60% fixed), direct materials $496,000, direct labor $34,900, administrative expenses $280,000 (20% variable and 80% fixed), and manufacturing overhead $358,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10%...
Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000...
Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000 on 100,000 units, selling expenses $210,000 (40% variable and 60% fixed), direct materials $498,000, direct labor $296,600, administrative expenses $284,000 (20% variable and 80% fixed), and manufacturing overhead $378,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10%...
Isaac Corporation has collected the following information after its first year of sales. Sales were $1,800,000...
Isaac Corporation has collected the following information after its first year of sales. Sales were $1,800,000 on 100,000 units; selling expenses $400,000 (30% variable and 70% fixed); direct materials $456,000; direct labour $250,000; administrative expenses $484,000 (50% variable and 50% fixed); manufacturing overhead $480,000 (40% variable and 60% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 20% next...
Lorge Corporation has collected the following information after its first year of sales. Sales were $2,100,000...
Lorge Corporation has collected the following information after its first year of sales. Sales were $2,100,000 on 105,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct materials $1,006,700; direct labor $240,000; administrative expenses $270,000 (20% variable and 80% fixed); and manufacturing overhead $399,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10%...
Axelle Corporation has collected the following information after its first year of sales. Net sales were...
Axelle Corporation has collected the following information after its first year of sales. Net sales were $2 million on 100,000 units, selling expenses were $400,000 (30% variable and 70% fixed), direct materials were $600,000, direct labour was $340,000, administrative expenses were $500,000 (30% variable and 70% fixed), and manufacturing overhead was $480,000 (20% variable and 80% fixed). Top managers have asked you to do a CVP analysis so that they can make plans for the coming year. They have projected...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT