Contabilidad

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Chapter 2
Financial Statements and Analysis

Solutions to Problems
P2-1. LG 1: Reviewing Basic Financial Statements Basic Income statement: In this one-year summary of the firm’s operations, Technica, Inc. showed a net profit for 2006 and the ability to pay cash dividends to its stockholders. Balance sheet: The financial condition of Technica, Inc. at December 31, 2005 and 2006 is shown as asummary of assets and liabilities. Technica, Inc. has an excess of current assets over current liabilities, demonstrating liquidity. The firm’s fixed assets represent over one-half of total assets ($270,000 of $408,300). The firm is financed by short-term debt, long-term debt, common stock, and retained earnings. It appears that it repurchased 500 shares of common stock in 2006. Statement ofretained earnings: Technica, Inc. earned a net profit of $42,900 in 2006 and paid out $20,000 in cash dividends. The reconciliation of the retained earnings account from $50,200 to $73,100 shows the net amount ($22,900) retained by the firm.P2-2. LG 1: Financial Statement Account Identification Basic (a) Statement BS BS BS BS IS BS BS BS IS IS BS IS IS BS BS (b) Type of Account CL CA CL FA* E FA CA SEE E FA E E CA FA

Account Name Accounts payable Accounts receivable Accruals Accumulated depreciation Administrative expense Buildings Cash Common stock (at par) Cost of goods sold Depreciation Equipment General expense Interest expense Inventories Land

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Part 1

Introduction to Managerial Finance

Long-term debt Machinery Marketable securities Notes payable Operating expense Paid-incapital in excess of par Preferred stock Preferred stock dividends Retained earnings Sales revenue Selling expense Taxes Vehicles
*

BS BS BS BS IS BS BS IS BS IS IS IS BS

LTD FA CA CL E SE SE E SE R E E FA

This is really not a fixed asset, but a charge against a fixed asset, better known as a contra-asset.

P2-3. LG 1: Income Statement Preparation Intermediate (a) Cathy Chen, CPAIncome Statement For the Year Ended December 31, 2006 Sales revenue Less: Operating expenses Salaries Employment taxes and benefits Supplies Travel & entertainment Lease payment Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (30%) Net profits after taxes $360,000 180,000 34,600 10,400 17,000 32,400 15,600 290,000 $70,00015,000 $55,000 16,500 $38,500

(b) In her first year of business, Cathy Chen covered all her operating expenses and earned a net profit of $38,500 on revenues of $360,000. P2-4. LG 1: Calculation of EPS and Retained Earnings Intermediate (a) Earnings per share: Net profit before taxes

$218,000

Chapter 2

Financial Statements and Analysis

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Less: Taxes at 40% Net profit after tax Less:Preferred stock dividends Earnings available to common stockholders

87,200 $130,800 32,000 $98,800

Earnings per share =

Earning available to common stockholders $98,800 = = $1.162 Total shares outstanding 85, 000

(b) Amount to retained earnings: 85,000 shares × $0.80 = $68,000 common stock dividends Earnings available to common shareholders Less: Common stock dividends To retainedearnings P2-5. LG 1: Balance Sheet Preparation Intermediate
Owen Davis Company Balance Sheet December 31, 2006 Assets Current assets: Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Land and buildings Machinery and equipment Furniture and fixtures Vehicles Total gross fixed assets Less: Accumulated depreciation Net fixed assets Total assetsLiabilities and stockholders’ equity Current liabilities: Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities

$98,800 68,000 $30,800

$215,000 75,000 450,000 375,000 $1,115,000 $325,000 560,000 170,000 25,000 $1,080,000 265,000 $815,000 $1,930,000

$220,000 475,000 55,000 $750,000 420,000 $1,170,000

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Part 1

Introduction to Managerial...
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