Denari Inc. had the following information at December 31,2016:
Denari Inc
Balance Sheet
at December 31, 2016
Assets 2016 2015 Cash $ 2,800 $ 2,300 Accounts Receivable 760 500 Prepaid Expenses 340 400 Machinery (net) $ 5,600 $ 6,000 Total Assets $ 9,500 $ 9,200 Liabilities Accounts Payable $ 1,400 $ 1,600 Unearned Revenue 800 725 Long-Term NotesPayable $ 3,400 $ 3,000 Total Liabilities $ 5,600 $ 5,325 Equity Common Stock (nopar) $ 80 $ 75 Retained Earnings 3,820 3,800 Total Equity $ 3,900 $ 3,875 Total Liabilities andEquity $ 9,500 $ 9,200
Denari Inc
Income Statement
For the Year Ended December 31, 2016
Service Revenue $ 10,000 Salary Expense $ (6,000) Utilities Expense (2,300) Depreciation Expense (2,000) Gain on Sale ofMachinery $ 390 Net Income $ 90
During the year, Denari:
bought new machinery and sold old machinery for $990 cash
repaid $1,100 of notes payable and borrowed new notes
issued new (no par value) common stock for cash
declared and paid cash dividends
Prepare Denariâs Cash Flow Statement for the year endedDecember 31, 2016, using the indirect method.
Denari Inc. had the following information at December 31,2016:
| Denari Inc Balance Sheet at December 31, 2016 | ||
| Assets | 2016 | 2015 |
| Cash | $ 2,800 | $ 2,300 |
| Accounts Receivable | 760 | 500 |
| Prepaid Expenses | 340 | 400 |
| Machinery (net) | $ 5,600 | $ 6,000 |
| Total Assets | $ 9,500 | $ 9,200 |
| Liabilities | ||
| Accounts Payable | $ 1,400 | $ 1,600 |
| Unearned Revenue | 800 | 725 |
| Long-Term NotesPayable | $ 3,400 | $ 3,000 |
| Total Liabilities | $ 5,600 | $ 5,325 |
| Equity | ||
| Common Stock (nopar) | $ 80 | $ 75 |
| Retained Earnings | 3,820 | 3,800 |
| Total Equity | $ 3,900 | $ 3,875 |
| Total Liabilities andEquity | $ 9,500 | $ 9,200 |
| Denari Inc Income Statement For the Year Ended December 31, 2016 | |
| Service Revenue | $ 10,000 |
| Salary Expense | $ (6,000) |
| Utilities Expense | (2,300) |
| Depreciation Expense | (2,000) |
| Gain on Sale ofMachinery | $ 390 |
| Net Income | $ 90 |
During the year, Denari:
bought new machinery and sold old machinery for $990 cash
repaid $1,100 of notes payable and borrowed new notes
issued new (no par value) common stock for cash
declared and paid cash dividends
Prepare Denariâs Cash Flow Statement for the year endedDecember 31, 2016, using the indirect method.
Related questions
Arlington Corporation's financial statements (dollars and sharesare in millions) are provided here.
| Balance Sheetsas of December 31 | |||
| 2016 | 2015 | ||
| Assets | |||
| Cash and equivalents | $ 14,000 | $ 12,000 | |
| Accounts receivable | 35,000 | 30,000 | |
| Inventories | 32,135 | 29,000 | |
| Total currentassets | $ 81,135 | $ 71,000 | |
| Net plant and equipment | 53,000 | 49,000 | |
| Total assets | $134,135 | $120,000 | |
| Liabilities andEquity | |||
| Accounts payable | $ 10,200 | $ 9,500 | |
| Accruals | 8,000 | 6,000 | |
| Notes payable | 6,900 | 5,300 | |
| Total currentliabilities | $ 25,100 | $ 20,800 | |
| Long-term bonds | 15,000 | 15,000 | |
| Total liabilities | $ 40,100 | $ 35,800 | |
| Common stock (4,000 shares) | 50,000 | 50,000 | |
| Retained earnings | 44,035 | 34,200 | |
| Common equity | $ 94,035 | $ 84,200 | |
| Total liabilities and equity | $134,135 | $120,000 | |
| IncomeStatement for Year Ending December 31, 2016 | |
| Sales | $208,000 |
| Operating costs excludingdepreciation and amortization | 160,000 |
| EBITDA | $ 48,000 |
| Depreciation &amortization | 6,000 |
| EBIT | $ 42,000 |
| Interest | 6,250 |
| EBT | $ 35,750 |
| Taxes (40%) | 14,300 |
| Net income | $ 21,450 |
| Dividends paid | 11,615 |
Enter your answers in millions. For example, an answer of$25,000,000,000 should be entered as 25,000.
What was net operating working capital for 2015 and 2016?
| 2015 | $ million |
| 2016 | $ million |
What was Arlington's 2016 free cash flow?
$ million
Construct Arlington's 2016 statement of stockholders'equity.
| CommonStock | Retained Earnings | TotalStockholders' Equity | ||
| Shares | Amount | |||
| Balances, 12/31/15 | million | $ million | $ million | $ million |
| 2016 Net Income | million | |||
| Cash Dividends | million | |||
| Addition to retained earnings | million | |||
| Balances, 12/31/16 | million | $ million | $ million | $ million |
What was Arlington's 2016 EVA? Assume that its after-tax cost ofcapital is 10%. Round your answer to two decimal places.
$ million
What was Arlington's MVA at year-end 2016? Assume that its stockprice at December 31, 2016 was $25.
The comparative statements of financial position of Mikos Inc. as at December 31, 2017 and 2018, and its statement of earnings for the year ended December 31, 2018, are presented below:
| MIKOS INC. | ||||||
| Comparative Statements of Financial Position | ||||||
| December 31 | ||||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Cash | $ | 10,600 | $ | 18,600 | ||
| Short-term investments | 72,200 | 40,800 | ||||
| Accounts receivable | 76,000 | 32,400 | ||||
| Inventories, at cost | 57,200 | 41,600 | ||||
| Prepaid expenses | 5,600 | 9,200 | ||||
| Land | 51,400 | 78,000 | ||||
| Property, plant, and equipment, net | 286,400 | 187,000 | ||||
| Intangible assets | 25,600 | 31,200 | ||||
| $ | 585,000 | $ | 438,800 | |||
| Liabilities and Shareholdersâ Equity | ||||||
| Accounts payable | $ | 18,600 | $ | 43,200 | ||
| Income tax payable | 9,200 | 2,600 | ||||
| Accrued liabilities | 11,600 | -0- | ||||
| Long-term notes payable | 126,000 | 182,000 | ||||
| Contributed capital | 232,000 | 68,000 | ||||
| Retained earnings | 187,600 | 143,000 | ||||
| $ | 585,000 | $ | 438,800 | |||
| MIKOS INC. | |||||
| Statement of Earnings | |||||
| For the Year Ended December 31, 2018 | |||||
| Sales | $ | 898,000 | |||
| Cost of sales | $ | 446,000 | |||
| Amortization expenseâintangible assets | 5,600 | ||||
| Depreciation expenseâproperty, plant, and equipment | 34,600 | ||||
| Operating expenses | 237,000 | ||||
| Interest expense | 13,600 | 736,800 | |||
| Earnings before income taxes | 161,200 | ||||
| Income tax expense | 48,360 | ||||
| Net earnings | $ | 112,840 | |||
| Additional information is as follows: | |
| a. | Land was sold for cash at its carrying amount. |
| b. | The short-term investments will mature in February 2019. |
| c. | Cash dividends were declared and paid in 2018. |
| d. | New equipment with a cost of $167,600 was purchased for cash, and old equipment was sold at its carrying amount. |
| e. | Long-term notes of $18,000 were paid in cash, and notes of $38,000 were converted to shares. |
| 1. | Prepare a statement of cash flows for Mikos Inc. for the year ended December 31, 2018 by using the indirect method. (Negative answers should be indicated by a minus sign.) |
Complex Balance Sheet
Presented below is the unaudited balance sheet as of December31, 2016, prepared by Zeus Manufacturing Corporationâsbookkeeper.
| Zeus Manufacturing Corporation Balance Sheet for the Year Ended December 31, 2016 | ||||
| Assets | Liabilities and Shareholders' Equity | |||
| Cash | $225,000 | Accounts payable | $133,800 | |
| Accounts receivable (net) | 345,700 | Mortgage payable | 900,000 | |
| Inventories | 560,000 | Notes payable | 500,000 | |
| Prepaid income taxes | 40,000 | Lawsuit liability | 80,000 | |
| Investments | 57,700 | Income taxes payable | 61,200 | |
| Land | 450,000 | Deferred tax liability | 28,000 | |
| Building | 1,750,000 | Accumulated depreciation | 420,000 | |
| Machinery and equipment | 1,964,000 | Total Liabilities | $2,123,000 | |
| Goodwill | 37,000 | Common stock, $50 par; 40,000 shares issued | $2,231,000 | |
| Total Assets | $5,429,400 | Retained earnings | 1,075,400 | |
| Total Shareholders' Equity | $3,306,400 | |||
| Total Liabilities and Shareholders' Equity | $5,429,400 | |||
Your company has been engaged to perform an audit, during whichyou discover the following information:
Checks totaling $14,000 in payment of accounts payable weremailed on December 31, 2016, but were not recorded until 2017. Latein December 2016, the bank returned a customerâs $2,000 checkmarked "NSF," but no entry was made. Cash includes $100,000restricted for building purposes.
Included in accounts receivable is a $30,000 note due onDecember 31, 2019, from Zeusâs president.
During 2016, Zeus purchased 500 shares of common stock of amajor corporation that supplies Zeus with raw materials. Total costof this stock was $51,300, and fair value on December 31, 2016, was$47,000. The decline in fair value is considered temporary. Zeusplans to hold these shares indefinitely.
Treasury stock was recorded at cost when Zeus purchased 200 ofits own shares for $32 per share in May 2016. This amount isincluded in investments.
On December 31, 2016, Zeus borrowed $500,000 from a bank inexchange for a 10% note payable, maturing December 31, 2021. Equalprincipal payments are due December 31 of each year beginning in2017. This note is collateralized by a $250,000 tract of landacquired as a potential future building site, which is included inland.
The mortgage payable requires $50,000 principal payments, plusinterest, at the end of each month. Payments were made on January31 and February 28, 2017. The balance of this mortgage was due June30, 2017. On March 1, 2017, prior to issuance of the auditedfinancial statements, Zeus consummated a noncancelable agreementwith the lender to refinance this mortgage. The new terms require$100,000 annual principal payments, plus interest, on February 28of each year, beginning in 2018. The final payment is due February28, 2025.
The lawsuit liability will be paid in 2017.
Of the total deferred tax liability, $5,000 is considered acurrent liability.
The current income tax expense reported in Zeusâs 2016 incomestatement was $61,200.
The company was authorized to issue 100,000 shares of $50 parvalue common stock.
Required:
Prepare a corrected classified balance sheet as of December 31,2016.
| Zeus Manufacturing Corporation Balance Sheet December 31, 2016 | |||
| Assets | |||
| Current Assets: | |||
| Cash | $ | ||
| Accounts receivable (net) | |||
| Inventories | |||
| Total current assets | $ | ||
| Long-Term investment, at fair value | |||
| Property, Plant, and Equipment (at cost): | |||
| Land | $ | ||
| Building | $ | ||
| Machinery and equipment | |||
| Total | |||
| Less: Accumulated depreciation | |||
| Total property, plant, and equipment | |||
| Intangible Asset: | |||
| Goodwill | |||
| Other Assets: | |||
| Cash restricted for building purposes | $ | ||
| Officer's note receivable | |||
| Land held for future building site | |||
| Total Assets | $ | ||
| Liabilities | |||
| Current Liabilities: | |||
| Accounts payable | $ | ||
| Current installments of long-term debt | |||
| Lawsuit liability | |||
| Income taxes payable | |||
| Deferred tax liability | |||
| Total current liabilities | $ | ||
| Long-Term Debt: | |||
| Mortgage payable | $ | ||
| Notes payable | |||
| Deferred tax liability | |||
| Total long-term debt | |||
| Total Liabilities | $ | ||
| Shareholders' Equity | |||
| Contributed Capital: | |||
| Common stock, $50 par value | $ | ||
| Additional paid-in capital | |||
| Total paid-in capital | $ | ||
| Retained earnings | |||
| Accumulated Other Comprehensive Loss: | |||
| Unrealized decrease in value of long-term investment | |||
| Total | $ | ||
| Less: Cost of treasury stock | |||
| Total Shareholders' Equity | |||
| Total Liabilities and Shareholders' Equity | $ | ||
