Question 1 - On June 1 Eckersley Service Co. was started with an initial investment in the company of $26,200 cash. Here are the assets and liabilities of the company at June 30, and the revenue and expense for the month of June, its first month of operations:
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Cash
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4600
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Note Payable
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12000
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Account Receivable
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4000
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Accounting Payable
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500
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Revenue
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7000
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Supplies Expense
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1000
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Supplies
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2400
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Gas and Oil Expense
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600
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Advertising Expense
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400
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Utilities Expense
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300
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Equipment
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29000
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Wage Expense
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1400
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Total Asset
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|
|
Total Liabilities
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|
In June, the company issued no additional stock, but paid dividends of $2,000.
Instructions
A. Prepare an income statement and Retained Earnings Statement for the month of June and a Balance Sheet.
B. Briefly discuss whether the company's first month of operation was a success.
C. Discuss the company's decision to distribute a dividend.
Question 2 - Prepare an income statement, a retained earnings statement, and a classified balance sheet of December 31, 2010.
You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year end.
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Account payable
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$834.00
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Accounts receivable
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$810.00
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Building, net of accumulated depreciation
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$1,537.00
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Cash
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$1,270.00
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Common Stock
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$900.00
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Cost of goods sold
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$990.00
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Current Portion of long-term debt
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$450.00
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Depreciation Expense
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$335.00
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Dividends
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$325.00
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Equipment, net of accumulated depreciation
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$1,220.00
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Income tax expense
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$165.00
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Income taxes payable
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$135.00
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Interest expense
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$400.00
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Inventories
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$967.00
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Land
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$2,100.00
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Long-term debt
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$3,500.00
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Prepaid Expenses
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$12.00
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Retained Earnings, beginning
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$1,600.00
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Revenues
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$4,600.00
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Short-term investments
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$210.00
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Wages expense
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$1,200.00
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Wages payable
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$700.00
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$222.00
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A. Prepare an Income Statement and a Retained Earnings Statement for Kiley Enterprises for the year ended April 30, 2010.
B. Prepare a classified balance sheet for Kiley Enterprises as of April 30, 2010.
Question 3 -
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LARK CORPORATION Balance Sheets 31-Dec
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Assets
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2010
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2009
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Cash
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$25,000.00
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$20,000.00
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Receivables (net)
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$70,000.00
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$62,000.00
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Other current assets
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$80,000.00
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$73,000.00
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Long-term investments
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$75,000.00
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$60,000.00
|
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Plant and equipment (net)
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$510,000.00
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$470,000.00
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Total assets
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$760,000.00
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$685,000.00
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|
|
|
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Liabilities and Stockholder's Equity
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|
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Current Liabilities
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$75,000.00
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$70,000.00
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Long-term debt
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$80,000.00
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$90,000.00
|
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Common stock
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$330,000.00
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$300,000.00
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Retained earnings
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$275,000.00
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$225,000.00
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Total Liabilities and stockholders's equity
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$760,000.00
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$685,000.00
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LARK CORPORATION Income Statements For the Years Ended December 31
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2010
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2009
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Sales
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$750,000.00
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$670,000.00
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Cost of goods sold
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$440,000.00
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$400,000.00
|
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Operating Expenses (Including income taxes)
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$240,000.00
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$220,000.00
|
|
Net Income
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$70,000.00
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$50,000.00
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|
|
|
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Additional Information:
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|
|
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Cash from operating activities
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$87,000.00
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$60,000.00
|
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Cash used for capital expenditures
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$45,000.00
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$38,000.00
|
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Dividends paid
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$20,000.00
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$15,000.00
|
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Average number of shares outstanding
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$33,000.00
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$30,000.00
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Instructions - Compute these values and ratios for 2009 and 2010
A. Earnings per share
B. Working Capital
C. Current Ratio
D. Debt to total assets ratio
E. Free cash flow
F. Based on the ratio calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2009 to 2010 of Lark Corporation.