FIN 4461-001: Financial Statement Analysis Homework 1 Due Thursday, September 13
ID: 2332470 • Letter: F
Question
FIN 4461-001: Financial Statement Analysis Homework 1 Due Thursday, September 13, 3:30 PM at the beginning of the class. Students are encouraged to work in groups of two or three (four maximum). Only one write-up needs to be handed in for a given group. Each group member's name should be noted clearly on the top of the first page. All submissions should be neatly written or typed and stapled. Please show all (relevant) work. Question1 Below is the balance sheet of ABC Company at the end of 2010 Assets Liab. & Owners Equity Cash Account receivable $1,000Long-term debt Inventory $500 $8,000 $4,000 $5,000 $1,400 S11,300 Accounts payable Common stock (par value -S2) Additional paid-in capital Retained earnings Total Assets $18,900 Liab. & Owners Equit S18,900 Its net income for year 2011 is $569. The dividend payout ratio (dividends/Net Income) is 28% Also, 200 new shares of common stock were issued and sold for $1400 in 2011. The 2011 ending balance sheet is partially given below Assets Liab. & Owners Equit Cash Account receivable Inventory $8,434Accounts payable $2,460Deferred taxes S5,972Long-term debt $1,100 $306 $23,000 Common stock (par value $2) PP&E Accum depreciation ($250) Retained carnings S20,000 Additional paid-in capital Total Assets $42 588Liab. & Owners Equit $36,616 36,616 (a) Please calculate common stock, additional paid-in capital, and retained earnings for 2011 ending balance sheet. (Round up the numbers no decimal points) (b) Please create the statement of cash flows for year 2011. (Round up the numbers - no decimal points)Explanation / Answer
Solution a:
common stock for 2011 ending balance sheet = Beginning common stock + Par value of common stock issued = $4,000 + (200*$2) = $4,400
Additional paid in capital for 2011 ending balance sheet = Beginning additonal capital + Additional capital from issue of new common stock
= $5,000 + (200*$5) = $6,000
Retained earnings for 2011 balance sheet = Beginning retained earnings + Net Income - Dividend paid
= $1,400 + $569 - ($569*28%) = $1,810
Solution b:
ABC Company Statement of Cash Flows For year ended December 31, 2011 Particulars Details Amount Cash Flow from Operating Activities: Net Income $569.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $250.00 Increase in accounts receivables ($2,460 - $1,000) -$1,460.00 Decrease in inventory ($6,600 - $5,972) $628.00 Increase in accounts payable ($1,100 - $500) $600.00 Increase in deferred taxes $306.00 Net Cash provided by operating activities $893.00 Cash Flow from Investing Activities: Purchase of PPE -$20,000.00 Net Cash Provided by Investing activities -$20,000.00 Cash Flow from Financing Activities: Proceed from issue of common stock $1,400.00 Proceed from long term debt $15,000.00 Dividend Paid ($569*28%) -$159.00 Net Cash Provided by financing activities $16,241.00 Net Increase / (Decrease) in Cash -$2,866.00 Cash balance at beginning of year $11,300.00 Cash balance at end of year $8,434.00Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.