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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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The solution explains the preparation of the Income Statement and the Statement of Cash Flows

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Income Statement and Cash Flow Statement

Please open the attached PDF file and then answer 2 question below using the information in the attached PDF file.

Question #1: Please develop a budgeted Income Statement.

Question #2: Complete a cash flow statement on a quarterly bases (assume that annual expenses are evenly dispersed on a quarterly bases) using the information in the attached PDF file.

A. There are 2 products: Car Batteries and Boat Batteries

B. There are 2 sales regions: Southeast and Southwest

C. There are 2 manufacturing divisions: Production and Assembly

D. Sales Prices: Car Batteries-$30.00; Boat Batteries-$35.00

E. There are 2 raw materials for each battery: Plastic and Electrodes

F. Raw materials prices: Plastic-$1.00: Electrodes—$2.00

G. Average Direct Labor Rates (per hour): Production-$4.00; Assembly- $3.00

H. The Manufacturing overhead rates (based on Direct Labor) are Production $2.00; Assembly $1.00

I. The order cost is $15.00

J. The annual carrying cost per unit of inventory is $1.50

K. Product Specification (see attachment for table)

L. Planned Sales (units). Planned Sales (units) (Sales are 95 % cash. The
balance of the sales is received in the following quarter. There is no bad
debt).

(see attachment for table)

M. Inventory Levels (units) - Assume no work in process:

(see attachment for table)

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