Purchase Solution

ABC Company: Use the information above to "recreate" JEs

Not what you're looking for?

Ask Custom Question

Income statement for year end 12/31/2010
Sales 500,000
Cost of goods sold 325,000
Gross profit 175,000
Sales general and admin expenses 125,000
Depreciation expenses 8,000
42,000
Other gains/losses
Gain from sale of equipment 7,000
Income before taxes 4,900
Income taxes 19,600
Net income 29,400

ABC co.
Balance sheet
As of 12/31/10 12/31/09
Cash 12,000 5,000
Accounts receivable 55,000 35,000
Inventory 55,000 65,000
Equipment 285,000 275,000
Accumulated depreciation (50,000) (55,000)
Total assets 357,000 325,000

Accounts payable 40,000 25,000
Income taxes payable 3,500 2,000
Dividends payable 10,000 5,000
Long-term debt 15,000 35,000
Common stock (1 par per share) 15,000 10,000
Common stock, paid in excess 35,000 25,000
Retained earnings 238,500 223,000
357,000 325000
Additional information on year 2010 transactions
New equipment was purchased with cash for 35,000
No unusual transactions affected equipment or accumulated depreciation
Accounts payable is 70% related to inventory, 30% related to other expenses
1 Book value per share
a) Earnings per share
2. Use the information above to "recreate" the journal entries for the following.
a) Purchase of equipment
b) Depreciation expense
c) Sale of the equipment
d) The issuance of new equity shares
e) The cash dividends paid (this one is compound)
3. Use the financials above to prepare statement of cash flows indirect method.
4. Use the financials above to prepare statement of cash flows direct method

Purchase this Solution

Solution Summary

Your tutorial is in Excel (attached). The cash flow statements (direct and indirect) are on separate tabs. Click in cells to see computations. Analysis of change in retained earnings, payables, inventory and dividends payable are completed to show you how to find needed amounts.

Solution Preview

Your tutorial is in Excel (attached). The cash flow statements ...

Solution provided by:
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution


Free BrainMass Quizzes
Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Introduction to Finance

This quiz test introductory finance topics.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basics of corporate finance

These questions will test you on your knowledge of finance.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.