Financial Reporting Analysis
Solutions to the Homework Assignment Problems
P1.31 Key Financial Statement Relations: Balance Sheet, Income Statement, and Statement of Cash Flow.
Missing Values
2007
2008
Balance sheet:
Cash
15,000 Property, plant and equipment
162,000
Intangible assets
10,000
Accounts payable
21,000 Interest payable
8,000
Long-term debt
52,000
Treasury stock
(10,000)
Income statement
Wages expense
6,000 Depreciation expense
11,000 Tax expense
8,000
Statement of cash flow
Cash collections from customers
138,000 Purchase of land
(7,000)
The company’s net income of $ 18000 on sales of $ 140000 (or a return on sales of nearly 13%) is a good sign that the financial performance in 2008 is satisfactory, generating net income of $18,000 on sales of $140,000. Furthermore , the company generated cash flow from operations of $9,000, which adequately covered the cash dividends.P2.31 Preparing Financial Statements from Accounting Events.
a. Spreadsheet at March 31, 2003:
Assets
=
Liabilities
+
Shareholders’ Equity
Cash
Kitchen
Equip
Computer
Food Prep
Equip
Furniture
& Fixtures
Leasehold
Improvements
Loan
Capital
Stock
Retained
Earnings
1.
+10,000
=
+10,000
2.
+120,000
=
+120,000
3.
No transaction recorded for signing of operating lease.
4.
-26,000
+26,000
5.
-12,000
+12,000
6.
-3,900
+1,200
+2,700
7.
-68,000
+68,000
20,100
26,000
12,000
1,200
2,700
68,000
=
120,000
10,000
0
Island Foods, Inc.
Balance Sheet
As of March 31, 2003
Assets
Liabilities & Shareholders’ Equity
Cash
$20,100
Liabilities:
Kitchen
P1.31 Key Financial Statement Relations: Balance Sheet, Income Statement, and Statement of Cash Flow.
Missing Values
2007
2008
Balance sheet:
Cash
15,000 Property, plant and equipment
162,000
Intangible assets
10,000
Accounts payable
21,000 Interest payable
8,000
Long-term debt
52,000
Treasury stock
(10,000)
Income statement
Wages expense
6,000 Depreciation expense
11,000 Tax expense
8,000
Statement of cash flow
Cash collections from customers
138,000 Purchase of land
(7,000)
The company’s net income of $ 18000 on sales of $ 140000 (or a return on sales of nearly 13%) is a good sign that the financial performance in 2008 is satisfactory, generating net income of $18,000 on sales of $140,000. Furthermore , the company generated cash flow from operations of $9,000, which adequately covered the cash dividends.P2.31 Preparing Financial Statements from Accounting Events.
a. Spreadsheet at March 31, 2003:
Assets
=
Liabilities
+
Shareholders’ Equity
Cash
Kitchen
Equip
Computer
Food Prep
Equip
Furniture
& Fixtures
Leasehold
Improvements
Loan
Capital
Stock
Retained
Earnings
1.
+10,000
=
+10,000
2.
+120,000
=
+120,000
3.
No transaction recorded for signing of operating lease.
4.
-26,000
+26,000
5.
-12,000
+12,000
6.
-3,900
+1,200
+2,700
7.
-68,000
+68,000
20,100
26,000
12,000
1,200
2,700
68,000
=
120,000
10,000
0
Island Foods, Inc.
Balance Sheet
As of March 31, 2003
Assets
Liabilities & Shareholders’ Equity
Cash
$20,100
Liabilities:
Kitchen