ADM 1340 Study Guide - Financial Statement
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the following Dec 31 year-end adjusted trial balance is forHeath Wilmer Co.The credit balance in Heath Wilmer Owner Capital atthe beginning of the year, January 1, was $320,000. The Owner,Heath Wilmer, invested an additional $300,000 during the currentyear. The land held for future expansion was also purchased duringthe current year.
Heath Wilmer Co. Adjusted Trial balance December 31 | ||
---|---|---|
Cash | $90,000 | |
Account receceivable | 18,000 | |
Prepaid insurance | 6,000 | |
Office supplies | 2,000 | |
Investments in stocks | 150,000 | |
Land held for future expasion | 300,000 | |
Office equipment | 18,000 | |
Accumulated depreciation-Equipment | $4,000 | |
Building | 600,000 | |
Accumulated depreciation-Building | 170,000 | |
Intangible assets-licensing agreement | 50,000 | |
Accounts payable | 17,800 | |
Salaries Payable | 16,400 | |
Long-term note payable | 224,000 | |
Heath Wilmer, Capital | 620,000 | |
Health Wilmer, Withdrawals | 60,000 | |
Service fees earned | 470,800 | |
Salaries expense | 180,000 | |
Insurance expense | 12,000 | |
Rent expense | 25,000 | |
Depreciation expense-Equipment | 2,000 | |
Depreciation expense-Building | 10,000 | |
Totals | $1,523,000 | $1,523,000 |
Required:
1. Prepare a classified year-end balance sheet. (Note: A $22,000installment on the long-term note payable is due within oneyear.)
2. Using the information presented:
(a) Calulate the current ratio. Comment on the ability of HeathWilmer Co. to meets its short-term debts.
(b) Calulate the debt ratio and comment on the financialposition and risk analysis of Heath Wilmer Co.
(c) Using the account balances to analyze the financial positionof Heath Wilmer Co., why would the owner need to invest anadditional $300,000 in the bussiness when the business is alreadyprofitable and the owner had an existing capital balance of$320,000?
Forten Company, a merchandiser, recently completed itscalendar-year 2015 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs incomestatement and balance sheets follow.
FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 | |||||
2015 | 2014 | ||||
Assets | |||||
Cash | $ | 50,404 | $ | 68,000 | |
Accounts receivable | 73,525 | 57,125 | |||
Inventory | 265,906 | 238,800 | |||
Prepaid expenses | 1,440 | 1,900 | |||
Total current assets | 391,275 | 365,825 | |||
Equipment | 154,300 | 112,000 | |||
Accum. depreciationâEquipment | (45,400) | (52,000) | |||
Total assets | $ | 500,175 | $ | 425,825 | |
Liabilities and Equity | |||||
Accounts payable | $ | 58,875 | $ | 110,000 | |
Short-term notes payable | 8,400 | 5,200 | |||
Total current liabilities | 67,275 | 115,200 | |||
Long-term notes payable | 33,575 | 39,000 | |||
Total liabilities | 100,850 | 154,200 | |||
Equity | |||||
Common stock, $5 par value | 161,500 | 148,000 | |||
Paid-in capital in excess of par, common stock | 40,500 | 0 | |||
Retained earnings | 197,325 | 123,625 | |||
Total liabilities and equity | $ | 500,175 | $ | 425,825 | |
FORTEN COMPANY Income Statement For Year Ended December 31, 2015 | |||||
Sales | $ | 615,000 | |||
Costof goods sold | 298,000 | ||||
Gross profit | 317,000 | ||||
Operating expenses | |||||
Depreciation expense | $ | 19,200 | |||
Other expenses | 141,000 | 160,200 | |||
Other gains (losses) | |||||
Loss on sale ofequipment | (4,300) | ||||
Income before taxes | 152,500 | ||||
Income taxes expense | 29,000 | ||||
Netincome | $ | 123,500 | |||
Additional Information on Year 2015Transactions | |
a. | The loss on the cash sale of equipment was $4,300 (details inb). |
b. | Sold equipment costing $44,800, with accumulated depreciation of$25,800, for $14,700 cash. |
c. | Purchased equipment costing $87,100 by paying $50,000 cash andsigning a long-term note payable for the balance. |
d. | Borrowed $3,200 cash by signing a short-term note payable. |
e. | Paid $42,525 cash to reduce the long-term notes payable. |
f. | Issued 2,700 shares of common stock for $20 cash per share. |
g. | Declared andpaid cash dividends of $49,800. |
Required: | |
1. | Prepare a complete statement of cash flows; report its operatingactivities using the indirect method. (Amounts to bededucted should be indicated with a minus sign.) |
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What are the Balance Sheet Ratios (debt-to-asset and debt-to-equity ratios) for the following financial information for 2015 and 2016? (PLEASE SHOW WORK SO I CAN UNDERSTAND HOW THIS WAS DONE. Thank you)
AMAZON.COM INC (AMZN) CashFlowFlag INCOME STATEMENT | ||
Fiscal year ends in December. USD in millions except per share data. | 2015-12 | 2016-12 |
Revenue | 107006 | 135987 |
Cost of revenue | 71651 | 88265 |
Gross profit | 35355 | 47722 |
Operating expenses | ||
Sales, General and administrative | 20411 | 27284 |
Other operating expenses | 12711 | 16252 |
Total operating expenses | 33122 | 43536 |
Operating income | 2233 | 4186 |
Interest Expense | 459 | 484 |
Other income (expense) | -206 | 190 |
Income before income taxes | 1568 | 3892 |
Provision for income taxes | 950 | 1425 |
Other income | -22 | -96 |
Net income from continuing operations | 596 | 2371 |
Net income | 596 | 2371 |
Net income available to common shareholders | 596 | 2371 |
Earnings per share | ||
Basic | 1.28 | 5.01 |
Diluted | 1.25 | 4.9 |
Weighted average shares outstanding | ||
Basic | 467 | 474 |
Diluted | 477 | 484 |
EBITDA | 8308 | 12492 |
AMAZON.COM INC (AMZN) CashFlowFlag BALANCE SHEET | ||
Fiscal year ends in December. USD in millions except per share data. | 2015-12 | 2016-12 |
Assets | ||
Current assets | ||
Cash | ||
Cash and cash equivalents | 15890 | 19334 |
Short-term investments | 3918 | 6647 |
Total cash | 19808 | 25981 |
Receivables | 6423 | 8339 |
Inventories | 10243 | 11461 |
Deferred income taxes | ||
Total current assets | 36474 | 45781 |
Non-current assets | ||
Property, plant and equipment | ||
Land | 9770 | 13998 |
Fixtures and equipment | 18417 | 25989 |
Other properties | 1866 | 2454 |
Property and equipment, at cost | 30053 | 42441 |
Accumulated Depreciation | -8215 | -13327 |
Property, plant and equipment, net | 21838 | 29114 |
Goodwill | 3759 | 3784 |
Intangible assets | ||
Deferred income taxes | 1084 | |
Other long-term assets | 2289 | 4723 |
Total non-current assets | 28970 | 37621 |
Total assets | 65444 | 83402 |
Liabilities and stockholders' equity | ||
Liabilities | ||
Current liabilities | ||
Accounts payable | 20397 | 25309 |
Accrued liabilities | 10384 | 13739 |
Deferred revenues | 3118 | 4768 |
Total current liabilities | 33899 | 43816 |
Non-current liabilities | ||
Long-term debt | 8235 | 7694 |
Capital leases | 5948 | 7519 |
Deferred taxes liabilities | 392 | |
Other long-term liabilities | 3978 | 4696 |
Total non-current liabilities | 18161 | 20301 |
Total liabilities | 52060 | 64117 |
Stockholders' equity | ||
Common stock | 5 | 5 |
Additional paid-in capital | 13394 | 17186 |
Retained earnings | 2545 | 4916 |
Treasury stock | -1837 | -1837 |
Accumulated other comprehensive income | -723 | -985 |
Total stockholders' equity | 13384 | 19285 |
Total liabilities and stockholders' equity | 65444 | 83402 |
AMAZON.COM INC (AMZN) Statement of CASH FLOW | ||
Fiscal year ends in December. USD in millions except per share data. | 2015-12 | 2016-12 |
Cash Flows From Operating Activities | ||
Net income | 596 | 2371 |
Depreciation & amortization | 6281 | 8116 |
Investments losses (gains) | 5 | |
Deferred income taxes | 81 | -246 |
Stock based compensation | 2119 | 2975 |
Accounts receivable | -1755 | -3367 |
Inventory | -2187 | -1426 |
Accounts payable | 4294 | 5030 |
Accrued liabilities | 913 | 1724 |
Other working capital | 1292 | 1955 |
Other non-cash items | 281 | -689 |
Net cash provided by operating activities | 11920 | 16443 |
Cash Flows From Investing Activities | ||
Investments in property, plant, and equipment | -4589 | -6737 |
Acquisitions, net | -795 | -116 |
Purchases of investments | -4091 | -7756 |
Sales/Maturities of investments | 3025 | 4733 |
Net cash used for investing activities | -6450 | -9876 |
Cash Flows From Financing Activities | ||
Long-term debt issued | 353 | 621 |
Long-term debt repayment | -4235 | -4361 |
Excess tax benefit from stock based compensation | 119 | 829 |
Repurchases of treasury stock | ||
Net cash provided by (used for) financing activities | -3763 | -2911 |
Effect of exchange rate changes | -374 | -212 |
Net change in cash | 1333 | 3444 |
Cash at beginning of period | 14557 | 15890 |
Cash at end of period | 15890 | 19334 |
Free Cash Flow | ||
Operating cash flow | 11920 | 16443 |
Capital expenditure | -4589 | -6737 |
Free cash flow | 7331 | 9706 |
Supplemental schedule of cash flow data | ||
Cash paid for income taxes | 273 | 412 |
Cash paid for interest | 478 | 496 |