MGAB02H3 Lecture Notes - Lecture 6: Earnings Before Interest And Taxes, Interest Expense, Asset Turnover
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Financial statements for E-Perform Inc follow:
E-Perform, Inc
Balance Sheet
December 31
2009 | 2008 | |
Assets | ||
Cash | $97,800 | $48,400 |
Accounts Receivable | 75,800 | 43,000 |
Inventories | 122,500 | 92,850 |
Prepaid Expenses | 38,400 | 26,000 |
Available-for-Sale Securities | 128,000 | 114,000 |
Property, plant and equipment | 270,000 | 242,500 |
Accumulated Depreciation | (50,000) | (52,000) |
Total Assets | $682,500 | $514,750 |
Liabilities and Shareholders' Equity | ||
Accounts Payable | $93,000 | $77,300 |
Accrued Expenses Payable | 11,500 | 7,000 |
Notes Payable | 110,000 | 150,000 |
Common Shares | 220,000 | 175,000 |
Retained Earnings | 234,000 | 105,450 |
Accumulated other comprehensive income | 14,000 | 0 |
Total liabilities and shareholders' equity | $682,500 | $514,750 |
Statement of Earnings:
Sales | $492,780 | |
Cost of Goods Sold | 185,460 | |
Gross Profit | 307,320 | |
Operating Expenses | ||
Other operating expenses | $62,410 | |
Depreciation expense | 46,500 | 108,910 |
Earnings from operations | 198,410 | |
Other expenses | ||
Interest expense | $4,730 | |
Loss on sale of equipment | 7,500 | 12,230 |
Earnings before income tax | 186,180 | |
Income tax expense | 45,000 | |
Net Earnings | $141,180 |
Additional Information:
1. The available-for-sale securities were revalued to their fair value of $128,000 at the end of 2009.
2. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 note payable
3. Old equipment having an original cost of $57,500 was sold for $1,500
4. Accounts payable relate only to merchandise creditors
5. Notes payable were repaid during the year
**Instructions: Prepare the cash flow statement using the direct method.
Need help completing an income statement!
Trial Balance:
Acc. # | Account Name | Debits | Credits |
100 | Cash | $ 66,000 | |
110 | Accounts receivable | 160,000 | |
115 | Allowance for doubtful accounts | $ 7,000 | |
120 | Inventory | 50,000 | |
135 | Prepaid insurance | 24,750 | |
136 | Prepaid advertising | 6,000 | |
150 | Land | 235,000 | |
160 | Building | 240,000 | |
165 | Accumulated depreciation - building | 61,500 | |
170 | Equipment | 150,000 | |
175 | Accumulated depreciation - equipment | 53,750 | |
190 | Notes receivable | 155,000 | |
195 | Interest receivable | 8,590 | |
200 | Accounts payable | 135,000 | |
215 | Interest payable | 11,000 | |
219 | Income tax payable | 12,477 | |
230 | Accrued liabilities | 42,000 | |
240 | Unearned revenue | 27,500 | |
250 | Notes payable - current portion | 20,000 | |
255 | Notes payable - long-term portion | 80,000 | |
270 | Bonds payable | 100,000 | |
300 | Common stock | 500,000 | |
310 | Retained earnings | 21,000 | |
350 | Dividends | 5,000 | |
400 | Sales | 1,337,250 | |
450 | Interest revenue | 94,590 | |
500 | Cost of goods sold | 616,000 | |
510 | Administrative and general expenses | 97,000 | |
515 | Insurance expense | 2,250 | |
520 | Selling expenses | 188,000 | |
531 | Depreciation expense - building | 7,500 | |
532 | Depreciation expense - equipment | 12,500 | |
550 | Interest expense | 71,000 | |
599 | Income tax expense | 12,477 | |
600 | Loss on sale of equipment | 60,000 | |
910 | Loss from operation of discontinued | 75,000 | |
segment ofbusiness | |||
915 | Loss from disposal of discontinued | 261,000 | |
segment ofbusiness | |||
$ 2,503,067 | $ 2,503,067 |
Income statement: (I've put in some of the numbers butI'm kinda lost with the operating expenses)
Sales | $ 1,337,250 | |
Cost of goods sold | 616,000 | |
Gross Profit | 721,250 | |
Operating expenses | ||
Selling expenses | 188,000 | |
Administrative and generalexpenses | ||
Total operating expenses | ||
Operating Income | ||
Other revenue | ||
Interest Revenue | 94,590 | |
Other expense and loss | ||
Interest expense | ||
Total other expense andloss | ||
Income from continuingoperations before income tax | ||
Income tax expense | 113,277 | |
Income from continuingoperations | 264,313 | |
Discontinued operations: | ||
Loss fromoperations of discontinued segment, net of | ||
income tax benefit | ||
Loss from disposalof discontinued segment, net of | ||
income tax benefit | ||
Total loss from discontinuedoperations | ||
* = Line-item is a subtotal,not an account | ||
EPS: | ||