Garlington Technologies Inc.'s 2018 financial statements are shown below:
Balance Sheet as of December 31, 2018
| Cash | $ 180,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Notes payable | 156,000 | |
| Inventories | 720,000 | Line of credit | 0 | |
| Total current assets | $1,260,000 | Accruals | 180,000 | |
| Fixed assets | 1,440,000 | Total current liabilities | $ 696,000 | |
| Common stock | 1,800,000 | |||
| Retained earnings | 204,000 | |||
| Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 |
Income Statement for December 31, 2018
| Sales | $3,600,000 |
| Operating costs | 3,279,720 |
| EBIT | $ 320,280 |
| Interest | 18,280 |
| Pre-tax earnings | $ 302,000 |
| Taxes (40%) | 120,800 |
| Net income | 181,200 |
| Dividends | $ 108,000 |
Suppose that in 2019 sales increase by 20% over 2018 sales and that 2019 dividends will increase to $196,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2018. Use an interest rate of 11%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2019 |
|||
| Sales | $ | ||
| Operating costs | $ | ||
| EBIT | $ | ||
| Interest | $ | ||
| Pre-tax earnings | $ | ||
| Taxes (40%) | $ | ||
| Net income | $ | ||
| Dividends: | $ | ||
| Addition to RE: | $ | ||
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2019 |
|||
| Cash | $ | ||
| Receivables | $ | ||
| Inventories | $ | ||
| Total current assets | $ | ||
| Fixed assets | $ | ||
| Total assets | $ | ||
| Accounts payable | $ | ||
| Notes payable | $ | ||
| Accruals | $ | ||
| Total current liabilities | $ | ||
| Common stock | $ | ||
| Retained earnings | $ | ||
| Total liabilities and equity | $ | ||
In: Finance
Garlington Technologies Inc.'s 2018 financial statements are shown below:
Balance Sheet as of December 31, 2018
| Cash | $ 180,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Notes payable | 156,000 | |
| Inventories | 720,000 | Line of credit | 0 | |
| Total current assets | $1,260,000 | Accruals | 180,000 | |
| Fixed assets | 1,440,000 | Total current liabilities | $ 696,000 | |
| Common stock | 1,800,000 | |||
| Retained earnings | 204,000 | |||
| Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 |
Income Statement for December 31, 2018
| Sales | $3,600,000 |
| Operating costs | 3,279,720 |
| EBIT | $ 320,280 |
| Interest | 18,280 |
| Pre-tax earnings | $ 302,000 |
| Taxes (40%) | 120,800 |
| Net income | 181,200 |
| Dividends | $ 108,000 |
Suppose that in 2019 sales increase by 15% over 2018 sales and that 2019 dividends will increase to $134,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2018. Use an interest rate of 14%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2019 |
|||
| Sales | $ | ||
| Operating costs | $ | ||
| EBIT | $ | ||
| Interest | $ | ||
| Pre-tax earnings | $ | ||
| Taxes (40%) | $ | ||
| Net income | $ | ||
| Dividends: | $ | ||
| Addition to RE: | $ | ||
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2019 |
|||
| Cash | $ | ||
| Receivables | $ | ||
| Inventories | $ | ||
| Total current assets | $ | ||
| Fixed assets | $ | ||
| Total assets | $ | ||
| Accounts payable | $ | ||
| Notes payable | $ | ||
| Accruals | $ | ||
| Total current liabilities | $ | ||
| Common stock | $ | ||
| Retained earnings | $ | ||
| Total liabilities and equity | $ | ||
In: Finance
| Riyadh Star, Balance Sheet Statement December 31, 2018 & December 31, 2019 | |||
| 2018 | 2019 | ||
| Cash | $ 104,000 | $ 123,250 | |
| Accounts Receivable | 183,350 | 100,000 | |
| Inventory | 250,000 | 210,000 | |
| Prepaid Expenses | 80,000 | 120,000 | |
| Equipment (Net) | 584,650 | 800,000 | |
| Total Assets | $ 1,202,000 | $ 1,353,250 | |
| Accounts Payable | $ 220,000 | $ 180,000 | |
| Salary Payable | 94,000 | 56,250 | |
| Interest Payable | 20,000 | 37,000 | |
| Bonds Payable | 320,000 | 300,000 | |
| Common Shares | 370,000 | 580,000 | |
| Retained Earnings | 178,000 | 200,000 | |
| Total Equity and Liabilities | $ 1,202,000 | $ 1,353,250 |
| Riyadh Star, Income Statement for the Year Ended Dec 31, 2019 | |||
| Sales | $ 1,255,250 | ||
| Cost of Goods Sold | 822,000 | ||
| Gross Profit | 433,250 | ||
| Salaries Expenses | 203,945 | ||
| Interest Expenses | 75,000 | ||
| Depreciation Expenses | 60,000 | ||
| Tax Expenses | 42,305 | ||
| Total Expenses | 381,250 | ||
| Net Income | $ 52,000 |
In addition:
(1) Equipment costing $215,350 was purchased and the company paid for it by issuing 10,735 shares at $10 each, and the remainder was paid in cash.
(2) The Star declared and paid cash dividends at the end of 2019.
Requirements:
(1) Prepare cash flow statement for the period ended on Dec 31, 2019 using direct method
(2) Prepare cash flow statement for the period ended on Dec 31, 2019 using indirect method
(3) Determine the balance of free cash flows on Dec 31, 2019 under both methods and comment on it.
In: Accounting
|
Labels: Current assets Current liabilities December 31, 2018 Expenses For the Year Ended December 31, 2018 Property, plant, and equipment Revenues Amount Descriptions: Book value-building Book value-equipment Change in retained earnings Net income Net loss Retained earnings, December 31, 2018 Retained earnings, January 1, 2018 Total assets Total current assets Total expenses Total liabilities Total liabilities and stockholders’ equity Total property, plant, and equipment Total revenues Total stockholders’ equity CHART OF ACCOUNTS |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lamp Light Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light Company prepared the following end-of-period spreadsheet at December 31, 2018, the end of the fiscal year:
| Lamp Light Company | ||||||
| End-of-Period Spreadsheet | ||||||
| For the Year Ended December 31, 2018 | ||||||
| Unadjusted Trial Balance | Adjustments | Adjusted Trial Balance | ||||
| Account Title | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. |
| Cash | 10,800.00 | 10,800.00 | ||||
| Accounts Receivable | 38,900.00 | (a) 11,300.00 | 50,200.00 | |||
| Prepaid Insurance | 4,200.00 | (b) 3,000.00 | 1,200.00 | |||
| Supplies | 2,730.00 | (c) 2,250.00 | 480.00 | |||
| Land | 98,000.00 | 98,000.00 | ||||
| Building | 400,000.00 | 400,000.00 | ||||
| Accumulated Depreciation-Building | 205,300.00 | (d) 10,100.00 | 215,400.00 | |||
| Equipment | 101,000.00 | 101,000.00 | ||||
| Accumulated Depreciation-Equipment | 85,100.00 | (e) 6,680.00 | 91,780.00 | |||
| Accounts Payable | 15,700.00 | 15,700.00 | ||||
| Salaries and Wages Payable | (f) 4,900.00 | 4,900.00 | ||||
| Unearned Rent | 2,100.00 | (g) 1,300.00 | 800.00 | |||
| Common Stock | 75,000.00 | 75,000.00 | ||||
| Retained Earnings | 128,100.00 | 128,100.00 | ||||
| Dividends | 10,000.00 | 10,000.00 | ||||
| Fees Earned | 363,700.00 | (a) 11,300.00 | 375,000.00 | |||
| Rent Revenue | (g) 1,300.00 | 1,300.00 | ||||
| Salaries and Wages Expense | 163,100.00 | (f) 4,900.00 | 168,000.00 | |||
| Advertising Expense | 21,700.00 | 21,700.00 | ||||
| Utilities Expense | 11,400.00 | 11,400.00 | ||||
| Depreciation Expense-Building | (d) 10,100.00 | 10,100.00 | ||||
| Repairs Expense | 8,850.00 | 8,850.00 | ||||
| Depreciation Expense-Equipment | (e) 6,680.00 | 6,680.00 | ||||
| Insurance Expense | (b) 3,000.00 | 3,000.00 | ||||
| Supplies Expense | (c) 2,250.00 | 2,250.00 | ||||
| Miscellaneous Expense | 4,320.00 | 4,320.00 | ||||
| 875,000.00 | 875,000.00 | 39,530.00 | 39,530.00 | 907,980.00 | 907,980.00 | |
Required:
| 1. | Prepare an income statement for the year ended December 31, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. |
| 2. | Prepare a retained earnings statement for the year ended December 31, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. |
| 3. | Prepare a balance sheet as of December 31, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. For those boxes in which you must enter subtracted or negative numbers use a minus sign. |
| 4. | Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles. |
| 5. | Prepare a post-closing trial balance. |
In: Accounting
Grossman Products began operations in 2018. The following
selected transactions occurred from September 2018 through March
2019. Grossman's fiscal year ends on December 31.
2018:
(a.) On September 5, Grossman opened a checking account and negotiated a short-term line of credit of up to $10,500,000 at 10% interest. The company is not required to pay any commitment fees.
(b.) On October 1, Grossman borrowed $8,500,000 cash and issued a 5-month promissory note with 8% interest payable at maturity.
(c.) Grossman received $3,500 of refundable deposits in December for reusable containers.
(d.) For the September through December period, sales totaled $5,500,000. The state sales tax rate is 4% and 80% of sales are subject to sales tax.
(e.) Grossman recorded accrued interest.
2019:
(f.) Grossman paid the promissory note on the March 1 due date.
(g.) Half of the storage containers are returned in March, with the other half expected to be returned over the next 6 months.
Required:
1. Prepare the appropriate journal entries for the
2018 transactions.
2. Prepare the liability section of the balance
sheet at December 31, 2018, based on the data supplied.
3. Prepare the appropriate journal entries for the
2019 transactions.
In: Accounting
On April 1, 2018, Western Communications, Inc., issued 12%
bonds, dated March 1, 2018, with face amount of $32 million. The
bonds sold for $31.3 million and mature on February 28, 2021.
Interest is paid semiannually on August 31 and February 28.
Stillworth Corporation acquired $32,000 of the bonds as a long-term
investment. The fiscal years of both firms end December 31, and
both firms use the straight-line method.
Required:
1. Prepare the journal entries to record (a) issuance of
the bonds by Western and (b) Stillworth’s investment on April 1,
2018.
2. Prepare the journal entries by both firms to
record all subsequent events related to the bonds through
maturity.
In: Accounting
| SMOLIRA GOLF CORP. 2017 and 2018 Balance Sheets |
||||||||||||||||
| Assets | Liabilities and Owners’ Equity | |||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Current assets | Current liabilities | |||||||||||||||
| Cash | $ | 24,056 | $ | 24,200 | Accounts payable | $ | 23,284 | $ | 27,200 | |||||||
| Accounts receivable | 12,548 | 15,300 | Notes payable | 12,000 | 10,900 | |||||||||||
| Inventory | 25,592 | 27,200 | Other | 11,671 | 15,900 | |||||||||||
| Total | $ | 62,196 | $ | 66,700 | Total | $ | 46,955 | $ | 54,000 | |||||||
| Long-term debt | $ | 90,000 | $ | 93,294 | ||||||||||||
| Owners’ equity | ||||||||||||||||
| Common stock and paid-in surplus | $ | 42,000 | $ | 42,000 | ||||||||||||
| Accumulated retained earnings | 208,936 | 242,706 | ||||||||||||||
| Fixed assets | ||||||||||||||||
| Net plant and equipment | $ | 325,695 | $ | 365,300 | Total | $ | 250,936 | $ | 284,706 | |||||||
| Total assets | $ | 387,891 | $ | 432,000 | Total liabilities and owners’ equity | $ | 387,891 | $ | 432,000 | |||||||
| SMOLIRA GOLF CORP. 2018 Income Statement |
|||||||
| Sales | $ | 336,329 | |||||
| Cost of goods sold | 231,000 | ||||||
| Depreciation | 21,600 | ||||||
| Earnings before interest and taxes | $ | 83,729 | |||||
| Interest paid | 14,400 | ||||||
| Taxable income | $ | 69,329 | |||||
| Taxes (21%) | 14,559 | ||||||
| Net income | $ | 54,770 | |||||
| Dividends | $ | 21,000 | |||||
| Retained earnings | 33,770 | ||||||
1. a. The total asset turnover is?
b. The equity multiplier isc. Using the DuPont identity the company's ROE is what percent?
In: Finance
|
KORBIN COMPANY |
|||||||||
|
Comparative Income Statements |
|||||||||
|
For Years Ended December 31, 2018, 2017, and 2016 |
|||||||||
|
2018 |
2017 |
2016 |
|||||||
|
Sales |
$ |
382,784 |
$ |
293,244 |
$ |
203,500 |
|||
|
Cost of goods sold |
230,436 |
186,210 |
130,240 |
||||||
|
Gross profit |
152,348 |
107,034 |
73,260 |
||||||
|
Selling expenses |
54,355 |
40,468 |
26,862 |
||||||
|
Administrative expenses |
34,451 |
25,805 |
16,891 |
||||||
|
Total expenses |
88,806 |
66,273 |
43,753 |
||||||
|
Income before taxes |
63,542 |
40,761 |
29,507 |
||||||
|
Income tax expense |
11,819 |
8,356 |
5,990 |
||||||
|
Net income |
$ |
51,723 |
$ |
32,405 |
$ |
23,517 |
|||
Complete the below table to calculate income statement data in common-size percents. (Round your percentage answers to 2 decimal places.)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In: Accounting
Garlington Technologies Inc.'s 2018 financial statements are shown below:
Balance Sheet as of December 31, 2018
| Cash | $ 180,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Notes payable | 156,000 | |
| Inventories | 720,000 | Line of credit | 0 | |
| Total current assets | $1,260,000 | Accruals | 180,000 | |
| Fixed assets | 1,440,000 | Total current liabilities | $ 696,000 | |
| Common stock | 1,800,000 | |||
| Retained earnings | 204,000 | |||
| Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 |
Income Statement for December 31, 2018
| Sales | $3,600,000 |
| Operating costs | 3,279,720 |
| EBIT | $ 320,280 |
| Interest | 18,280 |
| Pre-tax earnings | $ 302,000 |
| Taxes (40%) | 120,800 |
| Net income | 181,200 |
| Dividends | $ 108,000 |
Suppose that in 2019 sales increase by 10% over 2018 sales and that 2019 dividends will increase to $158,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2018. Use an interest rate of 8%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2019 |
|||
| Sales | $ | ||
| Operating costs | $ | ||
| EBIT | $ | ||
| Interest | $ | ||
| Pre-tax earnings | $ | ||
| Taxes (40%) | $ | ||
| Net income | $ | ||
| Dividends: | $ | ||
| Addition to RE: | $ | ||
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2019 |
|||
| Cash | $ | ||
| Receivables | $ | ||
| Inventories | $ | ||
| Total current assets | $ | ||
| Fixed assets | $ | ||
| Total assets | $ | ||
| Accounts payable | $ | ||
| Notes payable | $ | ||
| Accruals | $ | ||
| Total current liabilities | $ | ||
| Common stock | $ | ||
| Retained earnings | $ | ||
| Total liabilities and equity | $ | ||
In: Finance
Garlington Technologies Inc.'s 2018 financial statements are shown below:
Balance Sheet as of December 31, 2018
| Cash | $ 180,000 | Accounts payable | $ 360,000 | |
| Receivables | 360,000 | Notes payable | 156,000 | |
| Inventories | 720,000 | Line of credit | 0 | |
| Total current assets | $1,260,000 | Accruals | 180,000 | |
| Fixed assets | 1,440,000 | Total current liabilities | $ 696,000 | |
| Common stock | 1,800,000 | |||
| Retained earnings | 204,000 | |||
| Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 |
Income Statement for December 31, 2018
| Sales | $3,600,000 |
| Operating costs | 3,279,720 |
| EBIT | $ 320,280 |
| Interest | 18,280 |
| Pre-tax earnings | $ 302,000 |
| Taxes (40%) | 120,800 |
| Net income | 181,200 |
| Dividends | $ 108,000 |
Suppose that in 2019 sales increase by 15% over 2018 sales and that 2019 dividends will increase to $130,000. Forecast the financial statements using the forecasted financial statement method. Assume the firm operated at full capacity in 2018. Use an interest rate of 11%, and assume that any new debt will be added at the end of the year (so forecast the interest expense based on the debt balance at the beginning of the year). Cash does not earn any interest income. Assume that the all new-debt will be in the form of a line of credit. Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
| Garlington Technologies Inc. Pro Forma Income Statement December 31, 2019 |
|||
| Sales |
$ 4140000 |
||
| Operating costs | $ 3771678 | ||
| EBIT | $ 368322 | ||
| Interest | $ 17160 | ||
| Pre-tax earnings | $ 351162 | ||
| Taxes (40%) | $ 140465 | ||
| Net income | $ 210697 | ||
| Dividends: | $ 130000 | ||
| Addition to RE: | $ 80697 | ||
| Garlington Technologies Inc. Pro Forma Balance Statement December 31, 2019 |
|||
| Cash | $ | ||
| Receivables | $ | ||
| Inventories | $ | ||
| Total current assets | $ | ||
| Fixed assets | $ | ||
| Total assets | $ | ||
| Accounts payable | $ | ||
| Notes payable | $ | ||
| Accruals | $ | ||
| Total current liabilities | $ | ||
| Common stock | $ | ||
| Retained earnings | $ | ||
| Total liabilities and equity | $ | ||
In: Finance