Share
Explore BrainMass

Corey Issacson

Need help with the attached problems.

Question 1
Corey Issacson is an investor in stone cold interprises. Last week he received the companys most recent financial statements but some of the numbers were smudged and unreadable. Each of the unreadable numbers is represented with a letter as shown below and at the top of the following page.

stone cold enterprises
comparative balance sheet
Dec 31,2006 and 2007
(in thousands)
31-Dec-07 31-Dec-06

Assets $2,940.00 $1,020.00
cash 1850 1225
A/R 2855 1000
merchandise (a) 3000
prepaid insurance 25000 (b)
property, plant and equipment (C ) -6250
accumilated depreciation 8400 3000
other assets $35,545 $ (d)
total assets
liabilities and equity:
A/P $1,580.00 $950.00
wages payable 125 700
rent payable 500 500
long term notes payable (8%) 1200 12000
common stock (e) (f)
retained earnings (g) 10845
total liabilities and equity $ (h) $(i)

stone cold enterprises
Statement of stockholders equity
year ended dec. 31, 2007
common stock retained earnings total
balance december 31, 2006 $3,000 $(j) $(k)
issued common stock (l) (m)
net income 14,495 14,495
dividends paid -9000 -9000
balance december 31, 2007 $5,000 $(n) $21,340

stone cold enterprises
income statement
year ended dec. 31, 2007
sales revenue $103,000
cost of goods sold 6600
gross profit $37,000
operating expenses: $5,490
wages (o)
interest (p)
rent 1000
insurance 1250
depreciation (q)
total operating expenses $(r)
pretax income (s)
income taxes (35%) $(t)
net income

Additional information:
1. no items of plant, property & equipment were purchased or sold during the year.
2. the prepaid insurance account represents the remaining portion of a four year policy purchased on january 1, 2006.
3. the rent payable account at year end (both years) represents decembers rent that had not yet been paid.

Required: use your knowledge regarding the interrelationships amoung financial statements to determine each of the missing amounts.

question 2

Wal-mart Stores, Inc
Consolidated Statements of shareholders equity
Number of shares common Stock Capital in excess of par value retained earnings other accumilated comprehensive income total
(amounts in millions) 4,470 $447 $1,660 $29,984 ($684) $31,407
Balance January 31, 2001
comprehensive income
net income 6,592
other accumulated
comprehensive income -584 -584
Total Comprehensive income 6008
cash dividends ($0.28 per share) -1,249 -1,249
Purchase of Company stock -24 -2 -62 -1,150 -1,214
stock options excercised and other 7 240 240
Balance January 31, 2002 4,453 $445 $1,838 $34,177 ($1,268) $35,192
comprehensive income
net income 7,955 7,955
other accumulated
comprehensive income 759 759
Total Comprehensive income 8,714
cash dividends ($0.30 per share) -1,328 -1,328
Purchase of Company stock -63 -5 -150 -3,228 -3,383
stock options excercised and other 5 226 266
Balance January 31, 2003 4,395 440 1,954 37,576 -509 39,461
comprehensive income
net income 9,054 9,054
other accumulated
comprehensive income 1,360 1,360
Total Comprehensive income 10,414
cash dividends ($0.28 per share) -1,569 -1,569
Purchase of Company stock -92 -9 -182 -4,855 -5,046
stock options excercised and other 8 363 363
Balance January 31, 2004 4,311 $431 $2,135 $40,206 $851 $43,623
Note: slight modifications have been made to the statement for purposes of simplifying the presentation.

Required: from the information provided, answer the following questions:
a.       What was the total amount of contributed capital as of January 31, 2001
b.      Did total contributed capital increase or decrease between Jan 31, 2001 and Jan 31, 2004? By what amount?
c.       How much profit has been distributed to owners in cash during the three years covered by this statement?
d.      Has stockholders' equity increased or decreased over the three years and what was the main reason?
e.      Compute the ratio of cash dividends to net income for each year. Did the portion of profits paid out in dividends each year increase, decrease, or stay about the same?
f.        Compute the percentage change in net income between 2002 and 2003, and between 2003 to 2004. (hint: Divide the increase in net income from 2002 to 2003 by the net income for 2002) Do you believe this is an encouraging sign or a discouraging sign?
g.       Compute the percentage change in dividends between 2002 and 2003, and between 2003 and 2004. Is the rate of dividend increase greater or smaller than the rate of profit increase?

Attachments

Solution Preview

Question 1
Corey Issacson is an investor in stone cold interprises. Last week he received the companys most recent financial statements but some of the numbers were smudged and unreadable. Each of the unreadable numbers is represented with a letter as shown below and at the top of the following page.

stone cold enterprises
comparative balance sheet
Dec 31,2006 and 2007
(in thousands)
31-Dec-07 31-Dec-06

Assets $2,940.00 $1,020.00
cash 1850 1225
A/R 2855 1000
merchandise (a) 5,050 3000
prepaid insurance 25000 (b) 18,500
property, plant and equipment (C ) 6,250 6250
accumilated depreciation 8400 3000
total assets $35,545 $ (d) 27,995

liabilities and equity:
A/P $1,580.00 $950.00
wages payable 125 700
rent payable 500 500
long term notes payable (8%) 1200 12000
common stock (e) 5,000 (f) 3,000
retained earnings (g) 27,140 10,845
total liabilities and equity $ (h) 35,545 $(i) 27,995

stone cold enterprises
Statement of stockholders equity
year ended dec. 31, 2007
common stock retained earnings total
balance december 31, 2006 $3,000 $(j) 10,845 $(k)13,845
issued common stock (l) 2,000 (m) 2,000
net income 14,495 14,495
dividends paid -9000 -9000
balance december 31, 2007 $5,000 $(n) ...

Solution Summary

This solution is comprised of a detailed explanation to answer what was the total amount of contributed capital as of January 31, 2001.

$2.19