ACC 100 Lecture Notes - Cash Flow Statement, Retained Earnings, Accounts Payable

118 views21 pages

blackcricket139

27 Feb 2013

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Two different forms only: business entities and non-business entities. Business entities consist of: sole proprietorship, corporation and partnership. Business entities are organized to earn income: sole proprietorship, advantages: (1). [] decision making is informal and centered in the owner. (3). [] no qualification requirements for doing business in other states. (4). [] business profits are subject to only one tax, at the individual level, and are not subject to double tax as would be the case if the profits were realized by a c corporation. (6). [] losses are available on the owner"s personal income tax return and can offset other income (subject to the passive loss rules): disadvantages: (1). [] owner has unlimited liability for obligations and liabilities of the business. (2). [] death or disability of owner terminates business. (3). [] sale or other transfer of business requires transfer of individual assets. (4). [] no opportunity to utilize equity capital contributed by persons other than the owner. (5).

Related Questions

1. Waterways sold a piece of company equipment for $24,000. The equipment had been used for ten years. It had cost $80,000 when purchases and had a 10-years life and a $6,000 salvage value. Straight-line depreciation was used.

2. Waterways purchased new equipment costing $209,200.

3. The division paid $50,000 in dividends.

Waterways Corporation - Installation Division
Income Statement
For the year ending December 31


Sales		$5,536,077
Less: Cost of goods sold		3,132,777
Gross Profit		2,403,300
Operating expenses:
Advertising	$50,000
Insurance	400,000
Salaries and wages	584,640
Depreciation	71,319
Other operating expenses	21,200
Total operating expenses		1,127,159
Income from operations		1,276,141
Other income
Gain on sale of equip	18,000
Other expenses
Interest expense	(12,187)
Net other income and expenses		5,813
Income before income tax		1,281,954
Income tax expenses		384,586
Net income		$897,368

Waterways Corporation - Installation Division
Balance Sheet
December 31

Assets	This Year	Last Year
Current assets
Cash	$786,797	$746,681
Accounts receivable	680,750	542,685
Work in process	702,159	0
Inventory	16,766	7,500
Prepaid expenses	76,550	42,590
Total current assets	2,263,022	1,339,456
Property, plant, and equipment
Furnishings	40,416	40,416
Equipment	929,400	800,200
Buildings	450,000	450,000
Land	300,000	300,000
Accumulated depreciation	(482,523)	(485,204)
Total property, plant, and equipment	1,237,293	1,105,412
Total Assets	$3,500,315	$2,444,868

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$157,095	$128,360
Income taxes payable	101,344	79,989
Wages payable	4,517	1,984
Interest payable	1,187	0
Other current liabilities	14,515	15,246
Revolving bank loan payable	15,000	0
Total current liabilities	293,658	225,579
Long-term liabilities
Notes payable	140,000	0
Total liabilities	433,658	225,579
Stockholders' equity
Common stock	1,250,000	1,250,000
Retained earnings	1,816,657	969,289
Total stockholders' equity	3,066,657	2,219,289
Total liabilities and stockholders' equity	$3,500,315	$2,444,868

Instructions:

a. Prepare a statement of cash flow using the indirect method for this year.

b. Determine free cash flow.

beigeshark622

SMC, Inc. Balance Sheet December 31, 2017 Assets Cash ......................................................................................................... $34,500 Accounts receivable ................................................................................ 25,000 Inventory .................................................................................................. 10,000 Supplies ................................................................................................... 200 Total assets.............................................................................................. $69,700 Liabilities and Stockholdersâ Equity Liabilities: Accounts payable ............................................................................. $12,000 Salaries payable ............................................................................... 1,000 Income taxes payable ...................................................................... 3,675 Total liabilities.......................................................................................... $16,675 Stockholdersâequity: Capital stock (10,000 shares outstanding).................................... $25,000 Retained earnings ............................................................................ 28,025 Total stockholdersâ equity ....................................................................... 53,025 Total liabilities and stockholdersâ equity................................................ $69,700 SMC, Inc. Income Statement For the Year Ended December 31, 2017 Sales revenue .......................................................................................... $110,000 Rent revenue ........................................................................................... 1,000 Total revenues ......................................................................................... $111,000 Less cost of goods sold........................................................................... 60,000 Gross margin ........................................................................................... $ 51,000 Less operating expenses: Supplies expense ............................................................................. $ 400 Salaries expense .............................................................................. 22,000 Miscellaneous expense ................................................................... 4,100 26,500 Income before taxes................................................................................ $ 24,500 Less income taxes................................................................................... 3,675 Net income............................................................................................... $ 20,825 Earnings per share ( $20,825 / 10,000 shares) $ 2.08 SMC, Inc. Post-Closing Trial Balance December 31, 2017 Debits Credits Cash ......................................................................................................... $34,500 Accounts Receivable ............................................................................... 25,000 Inventory .................................................................................................. 10,000 Supplies ................................................................................................... Accounts Payable .................................................................................... 200 $12,000 Salaries Payable ...................................................................................... 1,000 Income Taxes Payable............................................................................. 3,675 Capital Stock............................................................................................ 25,000 Retained Earnings ................................................................................... 28,025 Totals........................................................................................................ $69,700 $69,700 You are also given the following information that summarizes the business activity for the current year, 2018 a. Issued 10,000 additional shares of capital stock for $45,000 cash on January 1st. b. Borrowed $20,000 on March 1, 2018, from Downtown Bank as a long-term loan. The interest rate on the loan is 5% and Interest for the year is payable on January 1, 2019. c. Paid $7,200 cash on April1 to lease a building for one year. d. Received $4,800 on May 1 from a tenant for one yearâs rent. e. Paid $2,400 on June 1 for a one-year insurance policy. f. Purchased $2,570 of supplies for cash on June 15th. g. Purchased inventory for $100,000 on account on July 1. h. August 1, sold inventory for $165,000 on account; cost of the merchandise sold was $92,000. i. Collected $105,000 cash from customersâ accounts receivable on August 20th. j. September 1, Paid $80,000 cash for inventories purchased earlier during the year. k. September 20th, paid $32,000 for sales repsâ salaries, including $1,000 owed at the beginning of 2016. l. Dividends for $8,500 were paid on October 20th. m. The income taxes payable at the beginning of 2018 were paid on November 15th. n. For adjusting entries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities. o. At year-end, $600 worth of supplies are on hand. p. At year-end, an additional $9,100 of sales salaries are owed, but have not yet been paid. q. Prepare an adjusting entry to recognize the taxes owed for 2018. The corporate tax rate is 25% of the income before income taxes. What are the T-accounts and enter the beginning balances from the December 31, 2017, post-closing trial balance for SMC. Post all current year journal entries to the T-accounts.? What are the Journal entries and post any necessary adjusting entries at the end of 2018. (Hint: Items b, c, d, e, o, p, and q require adjustment.) What is the adjusted trial balance, an income statement, statement of retained earnings and a balance sheet for 2018. What are Journal entries and post-closing entries for 2018 and prepare a post-closing trial balance. What is the current ratio and Debt to Total Asset Ratio for 2017 and 2018 What is your overall assessment of the financial health of SMC, Inc.?

graylizard248

Hillside,Inc.

BALANCE SHEET					INCOME STATEMENT
($ in millions)					($ in millions)

ASSETS		LIABILITIES			Revenue	28,681.10
Cash & Marketable Securities	449.90	Accounts Payable	1,611.20		Cost Of Goods Sold	20,768.80
Accounts Receivable	954.80	Salaries Payable	225.20		Gross Profit	7,912.30
Inventories	3,645.20	Other Current Liabilities	1,118.80
Other Current Assets	116.60	Total Current Liabilities	2,955.20		Operating Expenses:
Total Current Assets	5,166.50				Selling, General & Admin.	5,980.80
		Other Liabilities	693.40		Depreciation	307.30
Machinery & Equipment	1,688.90				Operating income	1,624.20
Land	1,129.70	Total Liabilities	3,648.60
Buildings	2,348.40				Interest	-
Depreciation	(575.60)	SHAREHOLDER'S EQUITY			Other Expense (Income)	(13.10)
Property, Plant & Equip. - Net	4,591.40	Common Stock	828.50		Income Before Taxes	1,637.30
Other Long Term Assets	120.90	Retained Earnings	5,401.70		Income Taxes	618.10
Total Long-Term Assets	4,712.30	Total Shareholder's Equity	6,230.20		Net Income	1,019.20

Total Assets	9,878.80	Total Liabilities & Equity	9,878.80
					Number of Common Stock
					Shares Outstanding	1,032,271


		Input Answers Below		Financial Performance Summary
LIQUIDITY RATIOS
Current Ratio (times)
Quick Ratio (times)
Average Payment Period (days)

ASSET MANAGEMENT RATIOS
Total Asset Turnover (times)
Average Collection Period (days)
Inventory Turnover (times)

FINANCIAL LEVERAGE RATIOS
Total Debt to Total Assets
Equity Multiplier (times)

PROFITABILITY RATIOS
Operating Profit Margin
Net Profit Margin
Return on Total Assets
Return on Equity
Earnings per Share

viridianporcupine777

ACC 100 Lecture Notes - Cash Flow Statement, Retained Earnings, Accounts Payable

Document Summary

Get access

Related Documents

ACC 100 Lecture Notes - Lecture 3: Accounts Payable, Deferral, Office Supplies

ACC 100 Chapter Notes - Chapter 1: Cash Flow Statement, Retained Earnings, Deferral

ACC 100 Study Guide - Midterm Guide: Financial Statement, Accounts Payable, No Entry

Related Questions