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    Corey Issacson

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    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?

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    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

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