In: Finance
Fill in the blanks in the income statement and balance sheet and show that Cash Flow Identity holds.
If the company sold $300 worth of fixed assets, how much fixed assets were sold?
Assuming that the company had either seasoned equity offering or repurchase, which one did the company have?
If the company borrowed $55 in 2018, how much of the Long-term debt was paid in 2018?
BALANCE SHEET - 2017 & 2018 |
||||||||||
ASSETS |
LIABILITIES and OWNERS EQUITY |
|||||||||
2017 |
2018 |
2017 |
2018 |
|||||||
Current Assets |
Current Liabilities |
|||||||||
Cash |
200 |
210 |
Accounts Payable |
180 |
185 |
|||||
A/R |
300 |
290 |
Notes Payable |
230 |
195 |
|||||
Inventory |
250 |
300 |
Total Current Liabilities |
410 |
380 |
|||||
Total Current Assets |
750 |
800 |
||||||||
Long-Term Debt |
245 |
…… |
||||||||
Fixed Assets |
||||||||||
Fixed Assets |
500 |
….. |
Owner's Equity |
595 |
715 |
|||||
Common Stock |
295 |
335 |
||||||||
Retained Earnings |
300 |
380 |
||||||||
TOTAL ASSETS |
1250 |
…… |
TOTAL LIABILITIES and OWNERS EQUITY |
1250 |
1350 |
INCOME STATEMENT - 2018 |
||
Sales |
4500 |
|
Cost |
2950 |
|
Depreciation |
300 |
|
Earnings before Interest and Tax (EBIT) |
1250 |
|
Interest |
350 |
|
Earnings before Tax (EBT) - Taxable Income |
……. |
|
Tax (30%) |
……. |
|
Net Income |
……. |
|
Dividend |
……. |
|
Add. To Retained Earnings |
……. |
Answer a.
2018:
Total Assets = Total Liabilities and Owner’s Equity
Total Assets = $1,350
Fixed Assets = Total Assets - Current Assets
Fixed Assets = $1,350 - $800
Fixed Assets = $550
Total Liabilities and Owner’s Equity = Total Liabilities +
Owner’s Equity
$1,350 = Total Liabilities + $715
Total Liabilities = $635
Total Liabilities = Current Liabilities + Long-term Debt
$635 = $380 + Long-term Debt
Long-term Debt = $255
Addition to Retained Earnings = Ending Retained Earnings -
Beginning Retained Earnings
Addition to Retained Earnings = $380 - $300
Addition to Retained Earnings = $80
Earnings before Tax = Earnings before Interest and Tax -
Interest
Earnings before Tax = $1,250 - $350
Earnings before Tax = $900
Tax = 30% * Earnings before Tax
Tax = 30% * $900
Tax = $270
Net Income = Earnings before Tax - Tax
Net Income = $900 - $270
Net Income = $630
Dividends = Net Income - Addition to Retained Earnings
Dividends = $630 - $80
Dividends = $550
Answer b.
Ending Fixed Assets = Beginning Fixed Assets + Fixed Assets
Purchased - Fixed Assets Sold
$550 = $500 + Fixed Assets Purchased - $300
Fixed Assets Purchased = $350
Fixed assets sold is $300
Answer c.
Increase in Common Stock = Ending Common Stock - Beginning
Common Stock
Increase in Common Stock = $335 - $295
Increase in Common Stock = $40
Company seasoned equity offering of $40
Answer d.
Ending Long-term Debt = Beginning Long-term Debt + Long-term
Debt Borrowed - Long-term Debt Repaid
$255 = $245 + $55 - Long-term Debt Repaid
Long-term Debt Repaid = $45