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    The Income Statement and the Statement of Cash Flows

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    E9.6
    Calculate Gross Profit, cost of goods sold, and selling price
    MBI, Inc. had sales of $141.6 million for fiscal year 2009. The companies gross profit ratio for that year was 31.6%.

    A.) Calculate the gross profit and cost of goods sold for MBI, Inc., for fiscal 2009.
    B.) Assume that a new product is developed and that it will cost $1860 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2009.
    C.) From a management viewpoint, what would you do with this information?

    E9.12
    Cash flows to accrual
    For each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the year ended 12/31/2009:

    A.) Cash collected from customers during the year amounted to $365,000 and accounts receivable increased by $30,000. How much were sales on account for the year ended 12/31/2009?
    B.) Cash payments for income taxes during the year were $232,000, and income taxes payable increased by $36,000. How much was income tax expense?
    C.) Cash paid to suppliers during the year amounted to $164,000, accounts payable decreased by $23,500, and inventories decreased by $10,000. How much was cost of goods sold?
    D.) The net book value of buildings increased by $125,000. No buildings were sold, and a new building costing $210,000 was purchased during the year. How much was depreciation expense?

    P9.18
    Calculate operating income and net income
    The following information is available from the accounting records of Spenser Co. for the year ended 12/31/2009.

    Selling, general, and administrative expenses....................................................$51,000
    Accounts payable.....................................................................................................85,000
    Extraordinary gain from lawsuit settlement, net of tax expense of $28,000...104,000
    Research and development expenses....................................................................37,000
    Loss from discontinued operations net of tax savings of $5,000.........................16,000
    Provision for income taxes.....................................................................................74,000
    Net sales..................................................................................................................579,000
    Interest expense......................................................................................................64,000
    Net cash provided by operations.........................................................................148,000
    Cost of goods sold..................................................................................................272,000

    A.) Calculate the operating income for Spenser Co. for the year ended 12/31/2009.
    B.) Calculate the company's net income for 2009.

    P9.22
    Prepare a statement of cash flows-indirect method
    The financial statements of Pouchie Co. included the following information for the year ended 12/31/2009 (amounts in millions).

    Depreciation and amortization expense..........................................................$520
    Cash dividends declared and paid......................................................................660
    Purchase of equipment.....................................................................................1,640
    Net income............................................................................................................768
    Beginning cash balance........................................................................................240
    Proceeds of common stock issued......................................................................296
    Proceeds from sale of building (at book value).................................................424
    Accounts receivable increase................................................................................32
    Ending cash balance...............................................................................................80
    Inventory decrease................................................................................................76
    Accounts payable increase....................................................................................88

    Complete the following statement of cash flows, using indirect method:

    Pouchie Co.
    Statement of Cash Flows
    For the year Ended 12/31/2009
    Cash flows from Operating Activities:
    Net income...............................................................................................$768
    Add (deduct) items not affecting Cash:
    ??????????...........................................................................................................................???
    ??????????...........................................................................................................................???
    ??????????...........................................................................................................................???
    ??????????...........................................................................................................................???
    Net cash provided (used) by operating activities.....................................???
    Cash Flows from Investing Activities:
    ??????????...........................................................................................................................???
    ??????????...........................................................................................................................???
    Net cash provided (used) by investing activities.....................................???
    Cash Flows from Financing Activities:
    ??????????...........................................................................................................................???
    ??????????...........................................................................................................................???
    Net cash provided (used) by financing actitivties....................................???
    Net increase (decrease) in cash for the year.........................................................???
    Cash balance, 1/1/2009........................................................................................240
    Cash balance, 12/31/2009......................................................................................80

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