3. A corporation has the following financial information for 2011 and 2012 2012

Question

3. A corporation has the following financial information for 2011 and 2012 2012 2011 Revenue 4000 4100 Cost of Good Sold 1600 1700 Depreciation 500 520 Inventories 300 350 Administrative Expenses 500 550 Interest Expenses 150 150 Taxes 400 420 Accounts Payable 300 350 Accounts Receivable 400 450 Net Fixed Assets 5000 5800 Long-term Debt 2000 2400 Notes Payable 1000 600 Dividend Paid 410 410 Cash and Equivalent 800 310 a) Please construct a balancesheet for 2011 and 2012. What is shareholders’ equity? b) Please construct an income statement for Textcon Inc for 2011 and 2012. What were reinvested earnings for 2012?

Explanation / Answer

All Amounts in $ Balance Sheets as on 2012 2011 Current Assets Cash and Equivalents 800 310 Accounts Receivable 400 450 Inventory 300 350 Total Current Assets 1500 1110 Net Fixed Assets 5000 5800 Total Assets 6500 6910 Current Liabilities Accounts Payable 300 350 Long-Term Debt 2000 2400 Notes Payable 1000 600 Shareholders' Equity (Balancing Figure) 3200 3560 Total Liabilities and Shareholders' Equity 6500 6910 Income Statement for the year ended 2012 2011 Revenue 4000 4100 Cost of Goods Sold 1600 1700 Contribution Margin 2400 2400 Administrative Expenses 500 550 Depreciation 500 520 Interest Expenses 150 150 Net Income before Taxes 1250 1180 Income Taxes 400 420 Net Income post Taxes 850 760 Dividends Paid 410 410 Transfer to Retained Earnings 440 350 (Reinvested Retained Earnings)

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